company of india limited...2 notice first leasing company of india limited regd. office : 749, anna...

C O M P A N Y O F I N D I A L I M I T E D

F I R S T L E A S I N G38th ANNUAL REPORT 2011 - 2012

BOARD OF DIRECTORS Dr. A.C. MUTHIAH (CHAIRMAN)

Mr. FAROUK IRANI (MANAGING DIRECTOR)

Mr. V. SELVARAJ

Mr. N. RAMAKRISHNAN

COMPANY SECRETARY Mr. N. KUMAR

STATUTORY AUDITORS M/s. SARATHY & BALU& TAX AUDITORS Chartered Accountants

No. 6 (Old No. 27)XI Avenue, Ashok Nagar,Chennai - 600 083

INTERNAL AUDITOR M/s. M.K. DANDEKER & CO.,Chartered Accountants2nd Floor, 138, Angappa Naicken StreetChennai - 600 001

REGISTERED OFFICE 749, Anna SalaiChennai 600 002Website : www.firstleasingindia.come-mail : [email protected]

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NOTICE

FIRST LEASING COMPANY OF INDIA LIMITEDRegd. Office : 749, Anna Salai, Chennai - 600 002.

NOTICE IS HEREBY GIVEN THAT THE THIRTY EIGHTH ANNUAL GENERALMEETING OF FIRST LEASING COMPANY OF INDIA LIMITED WILL BE HELDAT SATHGURU GNANANANDHA HALL, (NARADA GANA SABHA)NEW NO. 314 (OLD NO. 254) T T K ROAD, ALWARPET, CHENNAI 600018ON WEDNESDAY THE 26TH SEPTEMBER 2012 AT 3.00 P.M. TO TRANSACTTHE FOLLOWING BUSINESS:

ORDINARY BUSINESS:1. To receive, consider and adopt the audited Profit and Loss Account for

the year ended 31st March 2012 and Balance Sheet as at that date andCash flow statement for the year ended 31st March 2012 and report ofdirectors and auditors thereon.

2. To declare a Dividend.3. To appoint a Director in the place of Dr. A. C Muthiah, who retires by

rotation and being eligible offers himself for re-apointment.4. To appoint Auditors and fix their remuneration.

SPECIAL BUSINESS:5. To consider and if thought fit, to pass with or without modification(s) the

following resolution as an ordinary resolution."RESOLVED THAT pursuant to the provisions of section 257 of theCompanies Act, 1956, Mr V Selvaraj be and is hereby appointed asDirector of the Company who shall be liable to retire by rotation".

6. To consider and if thought fit, to pass with or without modification(s) thefollowing resolution as an ordinary resolution."RESOLVED THAT pursuant to the provisions of section 257 of theCompanies Act, 1956, Mr N Ramakrishnan be and is hereby appointedas Director of the Company who shall be liable to retire by rotation".

By Order of the Board

Place : Chennai N KUMARDate : 14th August 2012 Company Secretary

NOTES :

1) A MEMBER ENTITLED TO ATTEND AND VOTE AT THE MEETING ISENTITLED TO APPOINT A PROXY AND SUCH PROXY NEED NOT BE AMEMBER. THE PROXY FORM SHOULD BE LODGED WITH THECOMPANY NOT LATER THAN 48 HOURS BEFORE THE TIME FIXED FORTHE COMMENCEMENT OF THE MEETING.

2) Members are requested to notify immediately any change in theiraddress to the Company or to its Registrars and Share TransferAgents, M/s. Cameo Corporate Services Limited, SubramanianBuildings, 1 Club House Road, Chennai 600002. Members whoseshareholdings are in demat form are requested to send theintimation to their respective Depository Participant (DP).

3) Dividend if approved in the meeting will be paid to the shareholderswhose names appear as beneficial owners as per the list to befurnished by the Depositories in respect of shares held in electronicform and as members in the Register of Members as on26th September 2012.

4) Pursuant to Section 205A(5) of the Companies Act, 1956, theamount of dividend which remains unclaimed for a period of sevenyears shall be transferred by the Company to the InvestorEducation and Protection Fund. Shareholders who have notencashed the dividend warrants for the year ended 31st March2005 and / or any subsequent years are requested to make theirclaim to the Company.

5) The Register of Members and Share Transfer books of the Companywill remain closed from 21st September 2012 to 26th September 2012(both days inclusive) for the purpose of payment of Dividend.

6) The members are requested to opt for National Electronic ClearingService (NECS) facility for receiving dividend amount directly totheir bank account. Wherever NECS facility is not available, themembers are requested to provide latest bank account detailsfor credit of dividend amount to their bank account so as to avoidfraudulent / loss in postal transit of dividend warrants. To facilitatethis process, shareholders holding shares in electronic mode mayprovide the details to their depository participant and membersholding shares in physical mode may provide bank details to theCompany or Registrar and Share Transfer Agents.

7) Members who are desires of availing nomination are requested tocontact the Registrar and Share Transfer Agents in respect of sharesheld in physical form and the respective Depository Participant inrespect of shares held in dematerialized form.

8) In terms of the "Green Initiative" in Corporate Governance, theMinistry of Corporate Affairs communicated vide its circulars No.17/2011 dated 21st April 2011 and 18/2011 dated 29th April 2011that the Notice of the meeting, Annual Reports etc. required to befurnished by the Company to the members can be sent inelectronic mode. To facilitate this process, we request theshareholders to participate in the Green Initiative by registeringtheir e-mail address with the Company.

9) Dr. A C Muthiah, who retires by rotation at the ensuing AnnualGeneral Meeting holds 1,64,223 equity shares of Rs. 10/- each inthe share capital of the Company.



Item No. 5.

The Board of Directors at their meeting held on 14th August 2012 appointedMr. V Selvaraj as Additional Director of the company. In terms of theprovisions of section 260 of the Companies Act, 1956. Mr. V Selvaraj shallhold the Office up to the date of this Annual General Meeting.

In accordance with the provisions of section 257 of the Companies Act,1956 the company received a notice in writing from a member proposingthe candidature of Mr. V Selvaraj for the office of the Director togetherwith deposit of Rs. 500/-.

Brief resume of the Director, nature of his expertise in specific functionalareas and names of the Companies in which he holds Directorship /Membership of the Board / Committees are provided in the Report onCorporate Governance forming part of the Annual Report.

Approval of the shareholders is sought for passing the resolutions set outunder the item 5 of the Notice.

Your Directors recommend the resolution for adoption. None of theDirectors except Mr. V Selvaraj is deemed to be interested in this resolution.

Item No. 6.

The Board of Directors at their meeting held on 14th August 2012 appointedMr. N Ramakrishnan as Additional Director of the company. In terms

EXPLANATORY STATEMENT PURSUANT TO SECTION 173(2) OF THE COMPANIES ACT, 1956.

of the provis ions of section 260 of the Companies Act, 1956.Mr. N Ramakrishnan shall hold the Office up to the date of this AnnualGeneral Meeting.

In accordance with the provisions of section 257 of the Companies Act,1956 the company received a notice in writing from a member proposingthe candidature of Mr. N Ramakrishnan for the office of the Directortogether with deposit of Rs. 500/-.

Brief resume of the Director, nature of his expertise in specific functionalareas and names of the Companies in which he holds Directorship /Membership of the Board / Committees are provided in the Report onCorporate Governance forming part of the Annual Report.

Approval of the shareholders is sought for passing the resolutions set outunder the item 6 of the Notice.

Your Directors recommend the resolution for adoption. None of theDirectors except Mr. N Ramakrishnan is deemed to be interested in thisresolution.



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FIRST LEASING COMPANY OF INDIA LIMITED

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REPORT OF THE DIRECTORSDIRECTORATE:

Mr. A C Muthiah, Director of the Company, retires by rotation at thisAnnual General Meeting and being eligible offer himself for re-election.

Mr. V Selvaraj was appointed as Additional Director with effect from14th August 2012. He holds his Office upto the date of ensuing AnnualGeneral Meeting. In accordance with the provisions of section 257 ofthe Companies Act, 1956 the Company received a notice in writingfrom a member proposing his appointment as Director of the Companytogether with requisite deposit. The resolution seeking the approval ofthe members for appointment of Mr. V Selvaraj as Director of theCompany has been incorporated in the notice of the ensuing AnnualGeneral Meeting.

Mr. N Ramakrishnan was appointed as Additional Director with effectfrom 14th August 2012. He holds his Office upto the date of ensuingAnnual General Meeting. In accordance with the provisions of section257 of the Companies Act, 1956 the Company received a notice inwriting from a member proposing his appointment as Director of theCompany together with requisite deposit. The resolution seeking theapproval of the members for appointment of Mr. N Ramakrishnan asDirector of the Company has been incorporated in the notice of theensuing Annual General Meeting.

Maharaj Jai Singh, Mr. A Satish Kumar and Mr. M B Sridharan resignedfrom the Directorship of the Company with effect from 25th January 2012,8th August 2012 and 14th August 2012 respectively. The Board wishesto place on record its appreciation of the valuable services andguidance rendered by Maharaj Jai Singh, Mr. A Satish Kumar andMr. M B Sridharan during their association with the Company.

MANAGING DIRECTOR'S COMMISSION:The Board noted that the Managing Director of the Companyexpressed his intention to take a significantly reduced commission ofRs.15,54,952/- for the year ended 31st March 2012 which is equivalentto a normal bonus given to a staff member of the Company insteadof his eligible Commission of Rs. 1,00,83,723/- i.e 2% on the net profitscomputed under section 349 / 199 of the Companies Act, 1956, inview of adverse economic conditions prevailing in the financialindustry.

AUDITORS:The Statutory Auditors M/s. Sarathy & Balu, Chartered Accountants,Chennai (FRN- 03621S), retire at the ensuing Annual General Meetingand are eligible for re-appointment. Your Directors recommend theirre-appointment to hold the office as statutory auditors till theconclusion of the next Annual General Meeting. The Auditors haveconfirmed that the re-appointment, if made, will be within the limitsprescribed under Section 224(1B) of the Companies Act, 1956.

The firm has successfully undergone the Peer Review Process by PeerReview Board (PRB) of the Institute of Chartered Accountants of India,New Delhi. The firm holds a valid certificate issued by the Peer ReviewBoard of the said Institute.

COST AUDIT:The Ministry of Corporate Affairs vide its order No. 52 / 26 / CAB / 2010dated 2nd May 2011 read with its circular 12/2012 dated4th June 2012 made it mandatory to appoint Cost Auditor in respect ofcertain industries. The order covers industries engaged in PowerGeneration through Wind Mill Operations.

Accordingly, the Board of Directors of the Company have approvedthe appointment of Mr. S Sundar of M/s. S Sundar & Associates, CostAccountant in practice as Cost Auditor to conduct the audit of thecost records of the Company in respect of its Wind Mill Operations forthe financial year ended 31st March 2012 and 31st March 2013, subjectto the approval of Central Government.

CORPORATE GOVERNANCE:A report on Corporate Governance forms part of this report and acertificate from the Auditors of your Company regarding complianceof conditions of the Corporate Governance is attached to this report.A Management Discussion and Analysis Report also forms part of thisreport.

A REVIEW OF THE COMPANY'S PERFORMANCE OVER FISCAL 2012

First Leasing worked against an adverse tide of 13 interest rate impositionsand a decelerating economy (GDP growth is forecast at 5.6 to 6% againstthe 8 & 9% growth rates of earlier years). Raising money to fund assetgrowth in a cash strapped money market to meet sudden opportunitygrowth virtually disappeared. First Leasing's major expense account is"interest paid" which after the interest rate hikes referred to earlierescalated to Rs.149.85 Crores from the previous year's Rs.110.34 Crores.

First Leasing despite these adverse developments managed to increasetotal revenues to Rs. 213.35 Crores from the preceding year's Rs. 179.93Crores. This adverse impact of the high interest bill was subdued by carefulmanagement of Operating Expenses which were brought down toRs. 9.32 Crores from Rs.14.45 Crores a drop of 36%, almost equalizing "Profitsbefore exceptional expense and taxes", with last years number.

What proved impossible to replicate was the preceding year's windfallcapital gain of Rs. 53.42 Crores from the sale of CARE shares. Howeverthis drop was partially offset by the corresponding fall in taxes toRs. 17.22 Crores from Rs. 31.77 Crores.

First Leasing recognizes that funding will continue to be a serious problemin the coming year as inflation continues high in excess of globallyacceptable safe limits. The Company succeeded in negotiating thehighest bank limit increase in any fiscal year of Rs. 175 Crores to grow ourbusiness.

With the Equity markets lifeless we were constrained to find longer termmoney in the form of subordinated debt for periods of 5 years and3 months and 7 years. Fortunately Reserve Bank of India recognizes subdebt as Tier II Capital which will strengthen our funding base.

(Rs. in Lacs) (Rs. in Lacs)APPROPRIATIONS 2012 2011Profit for the year 3,161.83 7,086.54Surplus brought forward fromprevious year 12,798.95 8,189.93Statutory Reserve (633.00) (1,415.00)

Total 15,327.78 13,861.47

From which the followingappropriations are made :-General Reserve 238.00 531.00Dividend 410.23 455.81Corporate Tax on dividend 66.55 75.71Surplus in Profit and Loss Account 14,613.00 12,798.95

Total 15,327.78 13,861.47

REGULATION OF NBFCs:

The Company has complied with applicable regulations as per ReserveBank of India Directions to NBFCs. Capital Adequacy Ratio stood at19.24% (19.38%) as at 31st March 2012 as against the minimumrequirement of 15% stipulated by RBI. Net Non Performing Assets as at31st March 2012 stood at 0.12% (Nil).

DIVIDEND:

The Board of Directors have recommended a Dividend of Rs.1.80 pershare of Rs.10 each on the Equity Shares (18%) free of tax for the yearended 31st March 2012.

PUBLIC DEPOSITS:

The outstanding amount in Public Deposits Account as on31st March 2012 stood at Rs. 4,824.91 Lacs together with the accruedinterest of Rs. 285.75 lacs.

The Company has since repaid its entire Public Deposits outstandingas on 7th August 2012 together with the accrued interest on that dateto its Deposit holders and as such the amount due to Public towardsPublic Deposits is Nil.

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REPORT OF THE DIRECTORS (Contd.)

UNCLAIMED SHARE CERTIFICATES:In term of clause 5A II of the Listing Agreement, the Company has sentthree reminders to the shareholders whose share certificates remainsunclaimed with the Company. The Company will transfer the sharescomprised in the share certificates into one folio in the name of UnclaimedSuspense Account (Demat Account). The Company is in the process ofopening Unclaimed Suspense Account and further disclosures as statedin the Listing Agreement will be made in due course.

RATING:• "CARE A1+ " (A ONE PLUS) for Commercial Papers

• "CARE AA" (DOUBLE A) for Long Term Debentures

• "CARE AA+ (FD)" (DOUBLE A PLUS) for Fixed Deposits

• "CARE "AA" (DOUBLE A) Long Term Bank facilities

• "CARE "AA -" (DOUBLE A MINUS) for Un-Secured Subordinated debt

• "BWR AA" (BWR DOUBLE A) for Un-Secured Subordinated debt

PROVISION ON STANDARD ASSETS:As per Reserve Bank of India Directive, the Company has provided 0.25%on Standard Assets aggregating Rs. 42.44 Lacs (previous year Rs. 385.32Lacs) in the accounts for the year ended 31st March 2012.

INFORMATION AS PER COMPANIES (DISCLOSURE OF PARTICULARS IN THEREPORT OF BOARD OF DIRECTORS) RULES 1988:During the year under review, there is no information required to be statedrelating to Energy Conservation and Technology absorption.

Foreign currency expenditure amounting to Rs.1,080.02 Lacs was incurredduring the year under review relating to hedging costs for FCNR borrowingsfrom our bankers because a lower interest rate was available. TheCompany does not have any Foreign Exchange earnings.

PARTICULARS AS PER THE COMPANIES (PARTICULARS OF EMPLOYEES)RULES, 1975:Particulars of Employees in terms of requirement under Section 217(2A)of the Companies Act, 1956 are set out in the Annexure forming part ofthis Report.DIRECTORS' RESPONSIBILITY STATEMENT:Pursuant to the section 217(2AA) of the Companies Act, 1956 the Boardof Directors confirms:1. That in the preparation of the annual accounts, the applicable

accounting standards had been followed along with properexplanation relating to material departures.

2. That the directors had selected such accounting policies and appliedthem consistently and made judgements and estimates that arereasonable and prudent so as to give a true and fair view of the stateof affairs of the Company at the end of the financial year and of theprofit of the Company for that period.

3. That the directors had taken proper and sufficient care for themaintenance of adequate accounting records in accordance withthe provisions of Companies Act, 1956 for safeguarding the assetsof the Company and for preventing and detecting fraud and otherirregularities.

4. That the directors had prepared the annual accounts on a goingconcern basis.

ACKNOWLEDGEMENT:The Directors wish to thank the Bankers, Financial Institutions, Customersand Employees for their assistance and support extended to theCompany during the year under review.

For and on behalf of the BoardPlace : Chennai A C MUTHIAHDate : 14th August 2012 Chairman

ANNEXURE TO DIRECTORS’ REPORT

Statement of particulars of employees pursuant to the Provisions of Section 217 (2A) of the Companies Act, 1956, read with the Companies(Particulars of Employees) Rules, 1975

Qualifications / Date of Designation Remuneration LastName Age No. of years of Experience Employment and Nature Received employment

of Duties (Rs. in Lacs) held

Mr. Farouk M. Irani 71 September Managing Rs. 104.59 Senior Officer10,1973 Director - - First National

Entrusted City Bankwith substantialpowers ofmanagementincludingManagerialfunctions andall functionsrelating toits day to dayaffairs.

Note: 1. Remuneration includes Salary, Commission, Medical Expenses, Leave Travel Allowance, Motor Car Expenses and contribution to Provident Fund.

2. The nature of the employment of Managing Director is contractual.

3. Mr. Farouk Irani is not related to any Directors of the Company.

Mr. Irani was a Senior Officer of First National CityBank in 1973 when he left the Bank after ten years.Mr. Irani studied leasing in Hong Kong and Singaporeand spent a further six months developing the leasingconcept for acceptability to Indian Companies.Mr. Irani introduced Corporate Leasing to India in1973 when he got First Leasing Company of IndiaLimited operational Over the last 38 years Mr. Iranifunctioned as the Company's CEO / President /Managing Director and grew First Leasing Companyof India Limited from a fledgling startup Companyto one of India's Premier Leasing operations.Mr. Irani authored a widely acclaimed book entitled,"Inside Leasing" and has been honoured by beinginvited to address the World Leasing Convention onsix separate occasions at Washington, Sydney, SanFrancisco, Istanbul, Dublin, Hong Kong and the AsianLeasing and Finance Association in Taipei andTaiwan. Mr. Irani was invited by the World Bank toaddress a Seminar on Rejuvenation of the LeasingIndustries in Indonesia.Mr. Irani is the Chairman of the Association of Leasing& Financial Services Companies and has shoulderedthis responsibility for the last Nineteen years.

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MANAGEMENT DISCUSSION AND ANALYSIS REPORT

INDUSTRY STRUCTURE AND DEVELOPMENTS:

First Leasing was incorporated 38 years back as the First LeasingCompany in India. Today, Leasing is an essential part of the financialsystems and provides an important source of funds for every sectorof the Indian Economy, right from Consumer Finance relatedtransactions to equipment for the Pharmaceutical, Automobile,Softwares and Telecommunication Industries etc. Leasing is usedas an additional source of capital for financing the capital assetsof industries which enables them to reduce the earlier dependenceon working capital resources.

Leasing allows entrepreneurs to upgrade assets more frequentlyensuring they have the latest equipments without having to makefurther capital outlays. Leasing offers the flexibility of repaymentperiod being matched to the useful life of the assets. Leasingprovided a route for accessing finance to business which promotesdomestic production, economic growth and job creation.

Globalization of the Indian economy brought several Non-BankingFinancial Companies into the market resulting in more intensivecompetition. The Reserve Bank of India has taken several stepsincluding reducing risks weightage and provisioning norms for Loansgiven to Non-Banking Financial Companies so as to help themsurvive in the current liquidity crises.

Non-Banking Financial Companies play an important role in thefinancial sectors due to better consumer service, continuousreduction of non performing assets (NPA) and with their focusedoperations relating to their products and customers.

First Leasing, with its 38 years of successful experience, respondedto these market development by adopting safe credit policies andprocedures and prudent asset and liability management insteadof attempting to force growth.

OPPORTUNITIES & THREATS:

The Leasing Industry holds immense potential. The growing Indian

Economy will continue to provide several growth opportunities for

the financial services industries in India. A positive development in

the industry (adding to the conviction that the Leasing Industry

has good future prospects) is that Indian Industry is shedding its

conservative attitude of preference for asset ownership and

increasingly moving towards leased equipment.

There has been huge demand for Lease financing in respect of

consumer goods and infrastructure sectors as compared to other

markets. Leasing may be a useful source of financing, since access

to capital markets or bank loans is difficult for small and medium

size companies with unproven track records.

First Leasing Company of India Limited with its 38 year track record

has been able to run its business operations in a profitable manner

and generate adequate funds to meet its financial obligations to

banks and other credit grantors.

Non-Banking financial Companies continue to face competition

from local and multinational players in the market. The Leasing

Industry grew despite several constraints. These problems relate to

the inadequacy of funding , insufficient tax benefits, multiplicity of

taxes and the absence of specific legislation governing lease

transactions. Frequent changes in law affect leasing operations

substantially.

Interest rate volatility affects operating costs, expenses and

profitability of the Leasing Industry. The indiscriminate entry of new

companies into the industry evidenced a need for regulation and

the Reserve Bank of India imposed certain restrictions. To grow the

Leasing Industry, it is necessary for the Government to initiate tax

incentives.

Large professionally managed independent leasing companies

demonstrated an ability to succeed and grow. The leasing market

has not developed commensurately with the growth of leasing

companies. This has led to competition and as a result several

leasing companies, lacking in profession expertise, were forced to

exit.

SEGMENT WISE PERFORMANCE:

The Company is engaged in financial activities viz. providing lease

assistance, Hire Purchase Financing and Loans. The Company is

also engaged in Wind Power Generation. However, the

requirement to furnish segment wise performance is not applicable.

THE FUTURE

Capital Expenditure in India is at a rock bottom low as is inevitable

with responsible financial papers suggesting a GDP growth in the

sub 6% region. This dismal development is witnessed by the fact

that companies such as Reliance Industries Limited (RIL), Coal India

Limited (CIL) and Infosys are sitting on a cash pile of Rs.9 Crores

and refusing to invest.

Given the economic crisis in Euroland and the "financial cliff" facing

the US with the developed Western World barely achieving growth

of 1% we could be encouraged to believe that foreign investments

will find its way to India given the huge demographic demand

potential.

Unfortunately some of the tax provisions in the budget for 2012

seriously discouraged foreign investment. A ray of sunlight emerges

with Government permitting interest rates of 8% plus for Non

Resident deposits meaningful funds have come into India from Non

Resident Indians. Hopefully this would encourage banks to provide

more funding.

The recent break down of the power grid in north India does not

encourage investors nor does the "less than best monsoon"

(coupled with the continuing inflation) as cashflows to the

Agricultural Sector will most likely fall and lead to a depressed

aggregate consumer demand for manufactured products, once

again hurting capital expenditure prospects.

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RISKS AND CONCERNS:

The Company through its risk management systems clearly

identified the external and internal risks affecting its business

operations. External risk may arise because of fluctuations in interest

rates in the financial market, frequent changes in government

policies especially in tax matters and periodically from economic

downturns which affect the cash flow capacity of customers to

remit rentals etc.

EXTERNAL RISK IS ADDRESSED AS FOLLOWS:

• An Effective Credit appraisal system

• A carefully defined credit policy that focuses on the most credit

worthy prospects

• Flexible structuring to meet customer needs

• Sovereign risk/Central Government related transactions

• Continuing and close communication with legal counsel

Internal risk is monitored by adopting effective internal control

systems and procedures.

The Company has put in place a Risk Management Committee as

per the Guidelines on Corporate Governance issued by the Reserve

Bank of India to monitor Risk Management Systems so as to ensure

that the risk parameters are within the defined limits.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

The Company has put it place adequate internal controlling system

commensurate with the size of the company and nature of its

business. The Internal Control Systems and the procedures have

been repeatedly fine tuned and improved upon in line with business

changes. The Company has also established Standard Operating


Procedures for all its functional areas. The internal controls and

audit systems are being reviewed periodically by the management

and Audit Committee and steps are taken as part of continuous

improvement.

FINANCIAL PERFORMANCE:

• The Company's total income from operations has increased

from Rs. 179.93 Crores to Rs. 213.35 Crores representing an

increase of 18.57% over the preceding year.

• Interest Expenses increased by Rs. 39.51 Crores due to increase

in borrowings.

• The operating expenses decreased from Rs. 17.54 Crores to

Rs. 12.64 Crores.

• First Leasing's Cash Profits before tax decreased from Rs. 105.48

Crores to Rs. 50.86 Crores over the preceding year.

• The Company registered a net profit of Rs. 31.62 Crores as

against Rs.70.87 Crores (which included a profit on sale of

investment amounting to Rs. 42.77 Crores in the shares of Credit

Analysis and Research Limited by the Company) in the

corresponding period in the previous year after tax and

provisions.

HUMAN RESOURCES:

The Company is managed by a professional team under the

guidance of the Managing Director. Frequent meetings are

arranged to upgrade the knowledge of the employees and to

strengthen their managerial capabilities.

There are no material financial and commercial transactions in

which the management have personal interest that may represent

a potential conflict of interest.

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* Maharaj Jai Singh resigned on 25th January 2012

** Mr. M B Sridharan was appointed as Additional Directorof the Company with effect from 3rd February 2012.

*** Mr. A Selvaraj was appointed as Additional Director ofthe Company with effect from 14th August 2012.

**** Mr. N Ramakrishnan was appointed as AdditionalDirector of the Company with effect from 14th August 2012.

@ Mr. A Satish Kumar resigned on 8th August 2012.

** Mr. M B Sridharan resigned on 14th August 2012.

c) NUMBER OF OTHER BOARDS /COMMITTEES WHERE THE DIRECTORIS A MEMBER OR CHAIRPERSON / VICE CHAIRPERSON:

No. of Directorships No. of Chairmanship/Name of the Membership held in

Director Committees ofChairman Vice Director Companies*

Chairman Chairman MemberDr. A.C. Muthiah 2 – 1 – –Mr. Farouk Irani – – 1 – 2Mr. A. Satish Kumar – – 3 2 –Maharaj Jai Singh – – 3 2 1Mr. M B Sridharan – – 4 1 2

*Excluding Private Limited Companies and section 25 Companies.

d) NUMBER OF BOARD MEETINGS HELD WITH DATES:The number of Board meetings held during the year from1st April 2011 to 31st March 2012 is six. The dates of meeting aregiven below:

1. 5th May 2011.2. 11th August 2011.3. 23rd September 2011.4. 14th November 2010.5. 3rd February 2012 (at 3.00 p.m.).6. 3rd February 2012 (at 4.15 p.m.).

The time gap between any two meetings did not exceedfour months.

The compliance report in respect of laws applicable to theCompany has been periodically reviewed by the Board ofDirectors of the Company.

e) CODE OF CONDUCT:The Company has framed and adopted the Code of BusinessConduct and Ethics for Directors and Senior Managementwhich has been approved by the Board of Directors at itsmeeting held on 29th December 2005. This Code is applicableto the Directors and Senior Management personnel of theCompany. The Code has also been posted on the Web Site ofthe Company.

2. DISCLOSURES REGARDING APPOINTMENT AND RE-APPOINTMENTOF DIRECTORS:

APPOINTMENT:

A) At the ensuing Annual General Meeting, Mr. V Selvaraj isproposed to be appointed as Director of the Company. Briefparticulars of the director are as under:

After obtaining the Post Graduate Degree - Master of Arts inEconomics in Loyola College where he studied for 6 years i.e.from 1955 to 1961, he joined Indian Administrative Service andposted to serve in Tamil Nadu in 1964.

REPORT ON CORPORATE GOVERNANCE :

Your company is furnishing the report on Corporate Governancefor Eleventh Financial year in succession. The Board of Directorsare happy to state that your Company has been conforming withall applicable mandatory requirements stipulated in the listingagreement from time to time.

COMPANY'S PHILOSOPHY ON CODE OF GOVERNANCE:

First Leasing's philosophy on code of Corporate Governance is to:-

• Ensure benefits to all stakeholders and creation ofshareholders wealth.

• Maintain transparency with professionalism.

• Comply with all statutory regulations.

• Maintain steady growth.

• Ensure responsibility and accountability.

• Maintain a sound system of management control.

The Company believes that by adhering to its philosophy it canattain higher growth in business and optimize profitability.

1. BOARD OF DIRECTORS:

a) COMPOSITION & CATEGORY:

The Board at present comprises of four Directors. All theDirectors excepting the Managing Director are NonExecutive Directors. Since the Chairman is a Non-ExecutiveDirector, one-half of the Board comprises of IndependentDirectors which is as per the requirement of ListingAgreement. The Company had only one IndependentDirector during the period between 25th January 2012 and2nd February 2012, however the position was regularizedwithin the time prescribed by Clause 49 of the ListingAgreement.

b) ATTENDANCE OF EACH DIRECTOR AT THE BOARD MEETINGSAND THE LAST ANNUAL GENERAL MEETING:

No. of Board AttendanceName of Position Meetings at last Annual Category

the Director attended General(out of 6 held) Meeting

Dr. A.C. Muthiah Chairman 5 Present Non-Executive-Promoter

Mr. Farouk Irani Managing 6 Present Executive-Director Promoter

Mr. A. Satish Kumar@ Director 6 Present Independentand non-Executive

Maharaj Jai Singh* Director 4 Present Independentand Non-Executive

Mr. M B Sridharan** Director 2 – Independentand non-Executive

Mr. V Selvaraj*** Director – – Independentand non-Executive

Mr. N Rama- Director – – Independentkrishnan**** and non-

Executive

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REPORT ON CORPORATE GOVERNANCE (Contd.)

He served the Government in various capacities such as :

Director of Industries and Commerce : Chairman of the MadrasPort Trust for a period of 6 years and was responsible for theconstruction of the First System-based Container Terminal in Indiaand was the earliest to introduce the concept of ContainerFreight Stations and Inland Container Depots. The new containerterminal was declared open by Shrimathi Indira Gandhi, thethen Prime Minister of India, during this period.

Secretary to Government, Industries Department : In his capacityas Industries Secretary, he contributed immensely to the IndustrialDevelopment of Tamil Nadu, was responsible for the setting upof Madras Export Processing Zone and was in committees anddecision taking bodies with Government of India in Trade andCommerce.

Director in the Board of Madras Refineries for more than 10 years.Secretary to Government of Tamil Nadu, Housing and UrbanDevelopment in which capacity he was the Chief of theNegotiating Team with the World Bank and successfullynegotiated for a large scale funding for Tamil Nadu UrbanInfrastructure.

After retiring from the I.A.S, he had served in a number ofcorporate Groups as Advisor and as a Director in their Boardsand his corporate consultancy experience of nearly 20 yearscovers a vast area ranging from Shipping, IndustrialDevelopment, Formation of Joint Ventures, HospitalAdministration, Electric Power Generation, InformationTechnology and Education.

NAMES OF COMPANIES IN WHICH MR. V. SELVARAJ HOLDSDIRECTORSHIP:• First Leasing Company of India Limited

• National Trust Housing Finance Limited

• Cherrytech Intelisolve Limited

• Radaan Media Works India Ltd

• Natronix Semiconductor Technology Limited

MR. V SELVARAJ IS A MEMBER OF AUDIT COMMITTEE IN THEFOLLOWING COMPANIES -

• First Leasing Company of India Limited

SHAREHOLDING:

Mr. V Selvaraj does not hold any equity shares in First LeasingCompany of India Limited.

B) At the ensuing Annual General Meeting, Mr. N Ramakrishnanis proposed to be appointed as Director of the Company. Briefparticulars of the director are as under:

Mr. N. Ramakrishnan is an Advocate & Solicitor with over 30years' corporate experience in legal, secretarial andadministrative matters. He has Master's degrees in Law (GoldMedal in Company Law in LL.M.) and Commerce, and is aFellow of the Institute of Company Secretaries of India. Heserved 20 years in ITC Bhadrachalam Paperboards Limited,as Vice-President (Legal) and Company Secretary where hewas responsible for the legal, secretarial and administrativefunctions of the Company. He also headed the Financefunction for a year in a phase of transition. On this company'smerger with ITC Limited, he became Vice-President (Legal) ofITC Limited.

Mr. N Ramakrishnan moved over to Southern PetrochemicalIndustries Corporation Limited (SPIC) in 2002, and served SPICfor 9 years, heading its legal, secretarial and administrativefunctions, as Vice-President (Corporate Affairs) & Secretary.

In June 2011, Mr. N Ramakrishnan set up independent legalpractice as an Advocate & Solicitor.

Mr. N Ramakrishnan has served on the Boards of severalcompanies, and was also a member of the Governing Bodyof the Indian Council of Administration.

NAMES OF COMPANIES IN WHICH MR. N RAMAKRISHNAN HOLDSDIRECTORSHIP:• First Leasing Company of India Limited

• Accuspeed Engineering Services India Limited

MR. N RAMAKRISHNAN IS A MEMBER OF AUDIT COMMITTEE INTHE FOLLOWING COMPANIES -• First Leasing Company of India Limited

SHAREHOLDING:

Mr. N Ramakrishnan does not hold any equity shares in FirstLeasing Company of India Limited.

RE-APPOINTMENT:

At the ensuing Annual General Meeting, Dr. A C Muthiah,Director retiring by rotation is proposed to be re-appointed.Brief particulars of the director are as under:

Annamalai Chidambaram Muthiah, AC to his friends - anEngineering Graduate from the University of Madras, holdingan advanced Management Degree from the University ofDetroit, USA - is the Chairman Emeritus of a Business Empireworth USD One billion. His Group has interests in Chemicals,Petrochemicals, Fertilisers, Detergents, Port Facilitation,Logistics, Electronics, Biotechnology, Pharmaceuticals andEngineering Services.

Dr. A C Muthiah's interest in business and industry are wellknown. He is member (Industry) of the State PlanningCommission of the Government of Tamil Nadu. He was thePresident of the Federation of Indian Chambers of Commerceand Industry (FICCI), the oldest Chamber of Commerce inIndia, in its Platinum Jubilee year - 2003. Dr. A C Muthiah wasPresident of the Southern India Chamber of Commerce andIndustry, Chennai (established in 1909) for a continuous periodof 9 years (1979-87).

There are many other activities, lesser known, but in which heis equally interested. Education, Sports, Culture and Charitywould be the broad categories in which we can cast Muthiah'sactivities other than in business.

Dr. A C Muthiah is connected with a number of educationalinstitutions in areas as diverse as Engineering, Biotechnology,Mathematics, Economics, The Pure Sciences, Managementand Music.

Dr. A C Muthiah is the Chairman of the prestigious IndianInstitute of Management, Kozhikode. He founded the SPICBioprocess Laboratory along with the Anna University whichwas a pioneering effort in the area of Industry-Academiacollaboration.

The Chennai Mathematical Institute is Muthiah's brainchild. TheInstitute, run with the active participation of many eminentMathematicians, has an excellent reputation for quality workin Pure and Applied Mathematics. Dr. A C Muthiah is a FounderMember and a Member of the Board of Governors of theMadras School of Economics. He is the Chairman of theSri Venkateswara Educational and Health Trust that runs thehighly acclaimed Sri Venkateswara College of Engineering,near Chennai. He is on the Board of Governors of the renownedKalakshetra Foundation.

Dr. A.C.Muthiah has been a keen Polo player. He was thePresident of the Board of Control for Cricket in India (BCCI) fortwo terms (1999-2000 & 2000-2001) and a Member of theExecutive Board of the International Cricket Council (ICC)during the same period. He was the President of the Tamil

01 FLC AR 2012.p65 8/28/2012, 9:31 AM8


9


Nadu Cricket Association for eight years and is a Member ofmany prestigious Sports Clubs including the Marylebone CricketClub, London. Muthiah has a keen interest in equine sports.

Dr. A C Muthiah is the Hony. Secretary of the Tamil Isai Sangam,Chennai founded in 1943 by late Dr. Rajah Sir AnnamalaiChettiar with the object of promoting Tamil Classical Music.The Sangam had celebrated its Golden Jubilee in the Year1993 and is continuing to pursue actively its ideals andobjectives and is also running a Music College successfully.

Dr. A C Muthiah is the Managing Trustee of the ACM MedicalFoundation which runs several Health Care Centres, free ofcost, catering to Primary Health Care and Health Educationalneeds of 2000 to 2500 families located in villages withoutmedical facilities. He is also the Managing Trustee of the ACMEducational Foundation providing employment opportunitiesthrough Industrial Training to about 300 students at substantiallysubsidized cost.

Among the many awards that Dr. A C Muthiah counts dear tohim are the Honorary Doctorates that Anna University, Chennaiand Alagappa University, Karaikudi conferred on him, theKnighthood of Belgium and the 'Sat Seva Ratna' title bestowedon him by the Sankaracharya of Kanchi. Dr. A C Muthiah wasfelicitated by His Holiness Dharmapuram Adheenam inrecognition of his laudable and meaningful contributions toReligion, Community and Tamil and also by KundrakudiAdigalar.

Dr. A C Muthiah is the Hony. Consul for Belgium for SouthernIndia.

NAMES OF COMPANIES IN WHICH DR. A C MUTHIAH HOLDSDIRECTORSHIP :-

1. Tamilnadu Petroproducts Limited

2. SPEL Semi Conductor Limited

3. First Leasing Company of India Limited

SHAREHOLDING:

Dr. A C Muthiah holds 1,64,223 equity shares of Rs. 10/- each inthe share capital of the Company.

3. AUDIT COMMITTEE :a) BRIEF DESCRIPTION OF TERMS OF REFERENCE:

The terms of reference of the Audit Committee are inaccordance with those specified in Clause 49 of the ListingAgreement as amended from time to time and also conformto the requirements of Section 292A of the Companies Act,1956.

b) COMPOSITION, NAMES OF MEMBERS AND CHAIRPERSON:

Audit Committee comprises of the following members viz. :

1. Mr. A Satish Kumar *

2. Mr. Farouk Irani

3. Mr. M B Sridharan **

4. Mr. V Selvaraj ***

5. Mr. N Ramakrishnan ***** Ceased to be the Director with effect from 8th August 2012** Ceased to be the Director with effect from 14th August 2012*** Joined with effect from 14th August 2012

**** Joined with effect from 14th August 2012

Except Mr. Farouk Irani, the other two are non-executive andindependent directors. Mr. A Satish Kumar had been theChairman of the Audit Committee during the year underreview.

c) MEETINGS AND ATTENDANCE DURING THE YEAR AND DATES:

No. of Audit Committeemeetings held during the year Dates of the meetings

01st April 2011 to 31st March 2012

5th May 2011

11th August 20114

14th November 2011

3rd February 2012

The attendance of each member of the Committee is givenbelow:-

Name of the DirectorNo. of Audit Committee

Meetings attended

Mr. Farouk Irani 4

Mr. A Satish Kumar 4

Maharaj Jai Singh 3

Mr. M B Sridharan 1

The Internal Auditors and Statutory Auditors attend the AuditCommittee Meetings of the Company. The responsibility ofthe Audit Committee includes review of quarterly andAnnual Financial Results and interaction with Statutory andInternal Auditors and heads of Finance function regardingInternal Control Systems etc.

4. REMUNERATION TO DIRECTORS:No remuneration is paid to Non Executive Directors. Howevera sitting fee of Rs 10,000/- is paid to all Directors exceptManaging Director for each meeting and such payment is inaccordance with provisions of the Companies Act, 1956.However no sitting fee is paid to the Non-Executive Directorsfor attending other Committee Meetings.

None of the Directors has been given any Stock option duringthe year under review. No Sitting fee is paid to ManagingDirector.

Details of remuneration paid to Mr. Farouk Irani, ManagingDirector are as follows:

Particulars Amount (Rs. in Lacs.)

Salary 77.75

Commission 15.55

Contribution to Provident Fund & Others 9.33

Value of Perquisites 1.96

Total 104.59

The nature of the employment of Managing Director iscontractual. The terms do not contain any provision forpayment of severance fees other than normal entitlements.

Sitting Fees paid to Non-Executive Directors are as detailedbelow.

Name of the Director Sitting Fees (in Rs.)

Dr. A.C. Muthiah 50,000

Maharaj Jai Singh 40,000

Mr. A. Satish Kumar 60,000

Mr. M B Sridharan 20,000

01 FLC AR 2012.p65 8/28/2012, 9:31 AM9

10

The details of equity shares held by Non Executive Directors areas follows:

S. No. Name of the Director No. of Shares % of paid up capital

1 Dr. A.C. Muthiah 1,64,223 0.72

2 Maharaj Jai Singh 3,844 0.02

3 Mr. Satish Kumar A NIL NIL

4. Mr. M B Sridharan 150 0.0006

5. Mr. V Selvaraj NIL NIL

6. Mr. N Ramakrishnan NIL NIL

5. SHAREHOLDERS / INVESTORS GRIEVANCES COMMITTEE:

COMPOSITION, NAMES OF THE MEMBERS AND CHAIRPERSON:

The Committee consists of the following Directors viz.

1. Mr. A Satish Kumar *

2. Mr. Farouk Irani

3. Mr. M B Sridharan **

4. Mr. V Selvaraj ***

5. Mr. N Ramakrishnan ****

• Mr. A Satish Kumar Non-Executive Director had been theChairman of the Committee during the year under review.

• Mr. N Kumar, Company Secretary, is the Compliance Officer.

• The Committee held four meetings during the year.

• Number of shareholders' complaints received from 1st April 2011to 31st March 2012 - 20.

• Number of Complaints resolved to the satisfaction ofshareholders - 20

• Number of Complaints un resolved - Nil

• No Complaint pending for a period exceeding one month

* Ceased to be the Director with effect from 8th August 2012

** Ceased to be the Director with effect from 14th August 2012*** Joined with effect from 14th August 2012

**** Joined with effect from 14th August 2012

SHARE TRANSFER COMMITTEE:

The power to approve the transfers, transmissions etc. in respectof shares in physical form is entrusted by the Board of Directorsto Share Transfer Committee of the Company. Share TransferCommittee considers all the requests for transfer, transmission,consolidation, split, issue of duplicate certificates once in afortnight and after the Committee gives its approval in themeeting, physical share certificates are dispatched by Registeredpost.

However, the shares in Electronic form are being transferredthrough the respective Depository Participants of the seller / buyerthrough the share registry maintained by the Company'sRegistrars and Share Transfer Agents. Details of share transfersare placed before the Share Transfer Committee

REGISTRARS & TRANSFER AGENTS

M/s. Cameo Corporate Services Limited, Subramanian Buildings,No.1 Club House Road, Chennai 600002 are the Registrars andTransfer agents of the Company w.e.f 1st April 2003. The Companyhas renewed their appointment for a further period of two yearsfrom 31st March 2011 to 30th March 2013.

6. GENERAL BODY MEETINGS:Location and time where last three Annual General Meetingsheld:

Date of AGM Time LocationSathguru Gnananandha Hall,

23rd

September 2011 3.00 p.m. New No. 314 (Old No. 254), T.T.K. RoadAlwarpet, Chennai - 600 018

Sathguru Gnananandha Hall,23

rd September 2010 3.00 p.m. New No. 314 (Old No. 254), T.T.K. Road

Alwarpet, Chennai - 600 018

Sathguru Gnananandha Hall,24

th September 2009 3.00 p.m. New No. 314 (Old No. 254), T.T.K. Road

Alwarpet, Chennai - 600 018

The Chairman of the Audit Committee was present at all theabove Annual General Meetings.

A) DETAILS OF SPECIAL RESOLUTIONS PASSED IN LAST THREEANNUAL GENERAL MEETINGS:

AGM held on 24th September 2009 No Special resolution was passed

AGM held on 23rd September 2010 No Special resolution was passed

AGM held on 23rd September 2011 No Special resolution was passed

B) DETAILS OF SPECIAL RESOLUTION PASSED THROUGH POSTALBALLOT

During the year ended 31st March 2011 and also during theyear ended 31st March 2012, there was no resolution passedby the members of the Company through Postal Ballot. Atthe ensuing Annual General Meeting also, no resolution isproposed to be passed by Postal Ballot.

7. DISCLOSURES:

During the year there were no materially significant related partytransactions with the promoters, directors or the managementor relatives which have potential conflict with the interests ofthe Company at large. The details of transactions with therelated parties for the year 2011-2012 are disclosed in the Noteson Accounts forming part of the Annual Report. Hence, noseparate disclosure is made here.

There are no instances of non-compliance by the Companyand no penalties or strictures imposed on the Company by StockExchange or SEBI or any statutory authority, on any matterrelated to capital markets during the last three years.

The Company has complied with all the requirements of thelisting agreement with the Stock Exchanges as well as regulationsand guidelines of SEBI from time to time.

The Company has no Subsidiary as on 31st March 2012.

8. ACCOUNTING STANDARDS:The Company has complied with all applicable AccountingStandards in the preparation of Financial Statements.

9. CEO / CFO CERTIFICATIONAs required by Clause 49 (V) of the Listing Agreement, theManaging Director and the Chief Financial Officer of theCompany have given necessary certificate to the Board.

10. NON-MANDATORY REQUIREMENTS :REMUNERATION COMMITTEE :A Remuneration Committee has been in place to recommendto the Board the remuneration package payable for theManaging Director of the Company. The RemunerationCommittee met once on 5th May 2011.


01 FLC AR 2012.p65 8/28/2012, 9:31 AM10


11

The Committee at present comprises of following Directors asmembers:

1. Mr. A Satish Kumar *2. Mr. M B Sridharan **3. Mr. A Selvaraj ***4. Mr. N Ramakrishnan ****

Mr. A. Satish Kumar had been the Chairman of theRemuneration Committee during the period underreview.

* Ceased to be the Director with effect from 8th August 2012** Ceased to be the Director with effect from 14th August 2012*** Joined with effect from 14th August 2012**** Joined with effect from 14th August 2012

WHISTLE BLOWER POLICY:The Company at present does not have a specific and a formalWhistle Blower Policy. However, all the employees of theCompany have free access to meet senior level Managementpersonnel and report on any points of concern.The Company is in the process of evaluating ways and meansfor implementation of the other non mandatory requirementsas per Annexure I D of the Clause 49 of the Listing Agreementover a period of time.

11. MEANS OF COMMUNICATION:The half-yearly, quarterly & Annual financial results of theCompany are published in newspapers both in English and inRegional language. The results in English version are publishedin "Financial Express" and the results in Tamil version are publishedin "Makkal Kural".The results are also displayed in the Company's website viz.,www.firstleasingindia.comNo presentation has been made to Analysts / InstitutionalInvestors.

12. A MANAGEMENT DISCUSSION AND ANALYSIS REPORT FORMSPART OF THE REPORT OF DIRECTORS.

13. GENERAL SHAREHOLDER INFORMATION:

a) 38th AGM is scheduled to Wednesday,be held on 26th September 2012

3.00 p.m. at SathguruGnananandha Hall

254, T.T.K Road, Alwarpet,Chennai-600 018.

b) FINANCIAL CALENDAR - FOR THE YEAR 2012 - 2013

First Quarter results will be published On or before 14th August 2012

Second Quarter results will be published On or before 14th November 2012

Third Quarter results will be published On or before 14th February 2013

Results for the year ending On or before 30th May 201331st March 2013 will be published

c) Dates of Book Closure : From 21st September 2012 to26th September 2012 (both daysinclusive)

d) Date of Posting of Annual Between 25th August 2012 andReport 30th August 2012.

Date of payment of Dividend On or before 25th October 2012.

e) THE EQUITY SHARES OF THE COMPANY ARE LISTED IN THEFOLLOWING STOCK EXCHANGES

Name of Stock Exchange Stock Code Date of Payment ofListing Fees 2011-2012

Madras Stock Exchange Ltd. FLS (Physical Form) 25th April 2011INE 492B01019 (D-mat)

Bombay Stock Exchange Ltd. 500145 25th April 2011

National Stock Exchangeof India Ltd. FIRSTLEASE 25th April 2011

f) MARKET PRICE DATA :

NATIONAL STOCK EXCHANGE OF INDIA LTD.

STOCK MARKET DATA FOR THE PERIOD FROM 01.04 2011 TO 31.03.2012

BOMBAY STOCK EXCHANGE LTD.

SHARE PRICE SENSEX SHARE PRICE NIFTY

Share Sensex Share NIFTYMonth High Low Price High Low Average High Low Price High Low Average

(Rs.) (Rs.) Average (Rs.) (Rs.) Average

April 2011 108.00 70.05 89.03 19,811.14 18,976.19 19,393.67 107.95 66.40 87.18 5,944.45 5,693.25 5,818.85

May 2011 101.75 87.00 94.38 19,253.87 17,786.13 18,520.00 102.00 85.20 93.60 5,775.25 5,328.70 5,551.98

June 2011 116.45 74.25 95.35 18,873.39 17,314.38 18,093.89 116.50 74.10 95.30 5,657.90 5,195.90 5,426.90

July 2011 102.40 85.65 94.03 19,131.70 18,131.86 18,631.78 102.40 86.20 94.30 5,740.40 5,453.95 5,597.18

August 2011 87.95 71.55 79.75 18,440.07 15,765.53 17,102.80 87.60 70.90 79.25 5,551.90 4,720.00 5,135.95

September 2011 82.65 68.10 75.38 17,211.80 15,801.01 16,506.41 82.50 68.50 75.50 5,169.25 4,758.85 4,964.05

October 2011 74.00 67.50 70.75 17,908.13 15,745.43 16,826.78 74.50 67.00 70.75 5,399.70 4,728.30 5,064.00

November 2011 70.85 58.55 64.70 17,702.26 15,478.69 16,590.48 71.25 58.00 64.63 5,326.45 4,639.10 4,982.78

December 2011 62.65 48.25 55.45 17,003.71 15,135.86 16,069.79 64.95 47.55 56.25 5,099.25 4,531.15 4,815.20

January 2012 63.05 50.05 56.55 17,258.97 15,358.02 16,308.50 64.70 49.80 57.25 5,217.00 4,588.05 4,902.53

February 2012 74.40 57.80 66.10 18,523.78 17,061.55 17,792.67 73.85 57.50 65.68 5,629.95 5,159.00 5,394.48

March 2012 66.00 52.55 59.28 18,040.69 16,920.61 17,480.65 65.90 54.80 60.35 5,499.40 5,135.95 5,317.68


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12

No. of Shares held No. of Shareholders No. of Shares % Shareholding1 - 5,000 23,828 56,87,272 24.95

5,001 - 10,000 92 6,91,800 3.0410,001 - 20,000 45 6,59,393 2.8920,001 - 30,000 12 2,75,437 1.2130,001 - 40,000 10 3,53,903 1.5540,001 - 50,000 7 3,04,660 1.3450,001 - 1,00,000 18 13,26,718 5.82

1,00,001 - And Above 24 1,34,91,423 59.20Total 24,036 2,27,90,606 100.00

I) SHAREHOLDING PATTERN AS ON 31st MARCH 2012:Particulars No. of Shares % on Equity Capital

Promoters 58,64,879 25.73

Foreign Institutional Investors and Non-Resident Indians 12,92,204 5.67Banks, Financial Institutions and Mutual Funds 2,570 0.01Private Corporate Bodies 78,34,787 34.38

Public 77,96,166 34.21Total 2,27,90,606 100.00

h) DISTRIBUTION OF SHAREHOLDING AS ON 31st MARCH 2012:


Share Price Average Index Average

FLCI SHARE PRICE MOVEMENTS

MONTHS

A

VER

AG

E FL

CI S

HA

RE

PR

ICE

AV

ERA

GE

NIF

TY

FLCI SHARE PRICE MOVEMENTS - NATIONAL STOCK EXCHANGE OF INDIA LTD.

50.00

55.00

60.00

65.00

70.00

75.00

80.00

85.00

90.00

95.00

100.00

Ap

r-11

May

-11

Jun

-11

Jul-

11

Au

g-1

1

Sep

-11

Oct

-11

No

v-11

Dec

-11

Jan

-12

Feb

-12

Mar

-12

4500

5000

5500

6000

6500

7000

FLCI SHARE PRICE MOVEMENTS - BOMBAY STOCK EXCHANGE LTD.

MONTHS

A

VER

AG

E FL

CI S

HA

RE

PR

ICE

AV

ERA

GE

SEN

SEX

50.00

55.00

60.00

65.00

70.00

75.00

80.00

85.00

90.00

95.00

100.00

Ap

r-11

May

-11

Jun

-11

Jul-

11

Au

g-1

1

Sep

-11

Oct

-11

No

v-11

Dec

-11

Jan

-12

Feb

-12

Mar

-12

15000

16000

17000

18000

19000

20000

21000

22000

23000

j) PLANT LOCATION : WIND POWER PROJECTS AT:

Maharashtra GujaratVillage Ghatnandre Village SuthriTehsil Kovthe Mahankal Tehsil AbdasaDistrict Sangli District KutchState Maharashtra State Gujarat

Wind Mill at Mada Village, Jaisalmer district, Rajasthan was sold during the year under review.

k) DEMATERIALIZATION OF SHARES & LIQUIDITY:As on 31st March 2012, 2,09,67,109 equity shares being 92% of total equity shares issued have been dematerialized. Shares of theCompany are actively traded in National Stock Exchange Ltd. and Bombay Stock Exchange Ltd. and hence have good liquidity.

ADDRESS FOR CORRESPONDENCE :Company Registrars & Transfer Agent

First Leasing Company of India Limited Cameo Corporate Services Ltd.Secretarial Department “Subramanian Building”749, Anna Salai, Chennai 600 002 No.1, Club House Road,E-mail address: [email protected] Chennai - 600 002For redressal of Investor Complaints : E-mail address: [email protected]@flcindia.com

There are no outstanding GDRs / ADRs / Warrants or any convertible instruments issued by the Company.

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DECLARATION FOR COMPLIANCE WITH CODE OF CONDUCT

ToThe Shareholders of First Leasing Company of India LimitedPursuant to clause 49(1) (D) (ii) of the Corporate Governance Report, I hereby declare that all the Board members and the SeniorManagement personnel have affirmed the compliance with the Code of Conduct for the year ended 31st March 2012.

Place : Chennai FAROUK IRANIDate : 28th May 2012 Managing Director

AUDITORS’ CERTIFICATE ON CORPORATE GOVERNANCE

TO THE MEMBERS OF FIRST LEASING COMPANY OF INDIA LIMITED

We have examined the compliance of conditions of Corporate Governance by First Leasing Company of India Limited for the year ended31st March 2012, as stipulated in Clause 49 of the Listing Agreement entered into by the Company with the stock exchanges.The compliance of conditions of Corporate Governance is the responsibility of the Company's management. Our examination was limitedto a review of the procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditions ofCorporate Governance. It is neither an audit nor an expression of opinion on the financial statements of the Company.In our opinion and to the best of our information and according to the explanations given to us, We certify that the Company has compliedwith the conditions of Corporate Governance as stipulated in the above mentioned listing agreements.We state that no investor grievance is pending for a period exceeding one month against the Company, as per the records maintained bythe Company which were presented to the Shareholders / Investors Grievance Committee.We further state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or effectivenesswith which the management has conducted the affairs of the Company.

For Sarathy & BaluChartered Accountants

FRN-03621S

CA. N.R. SRIDHARANPlace : Chennai PartnerDate : 14th August 2012 Membership No: 15527

To the Members of First Leasing Company of India Ltd.REPORT OF THE AUDITORS

1. We have audited the attached Balance Sheet of First LeasingCompany of India Limited, ('the Company') as at 31st March 2012,the Statement of Profit and Loss and the Cash Flow Statement forthe year ended on that date annexed thereto. These financialstatements are the responsibility of the Company's management.Our responsibility is to express an opinion on these financialstatements based on our audit.

2. We conducted our audit in accordance with auditing standardsgenerally accepted in India. Those Standards require that we planand perform the audit to obtain reasonable assurance aboutwhether the financial statements are free of material misstatement.An audit includes examining, on a test basis, evidence supportingthe amounts and disclosures in the financial statements. An auditalso includes assessing the accounting principles used andsignificant estimates made by management, as well as evaluatingthe overall financial statement presentation. We believe that ouraudit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor's Report) Order, 2003, issuedby the Central Government, in terms of sub-section (4A) of section227 of the Companies Act, 1956, and on such checks of the booksand records of the Company as we considered appropriate andaccording to the information and explanations given to us, wegive in the Annexure a statement on the matters specified inparagraphs 4 and 5 of the said Order, to the extent they areapplicable to the Company.

4. Further to our comments in the Annexure referred to in paragraph3 above, we report that:

i) We have obtained all the information and explanations which,to the best of our knowledge and belief, were necessary forthe purposes of our audit;

ii) In our opinion, proper books of account as required by law,have been kept by the Company so far as appears from ourexamination of those books;

iii) The Balance Sheet, the Statement of Profit and Loss and CashFlow Statement dealt with by this report are in agreementwith the books of account;

iv) In our opinion, the Balance Sheet, Statement of Profit and Lossand Cash Flow statement dealt with by this report comply withthe Accounting Standards referred to in sub-section (3C) ofSection 211 of the Act.

v) On the basis of written representations received from theDirectors, as on 31st March 2012, and taken on record by theBoard of Directors, we report that none of the directors isdisqualified as on 31st March 2012 from being appointed as adirector in terms of clause (g) of sub-section (1) of Section 274of the Companies Act, 1956;

vi) The question of provision / payment of cess under section441 A of the Companies Act 1956, does not arise as the saidsection is yet to be notified;

vii) In our opinion and to the best of our information and accordingto the explanations given to us, the said financial statementstogether with the notes thereon attached thereto, give theinformation required by the Companies Act, 1956 in themanner so required and give a true and fair view in conformitywith the accounting principles generally accepted in India:

a) in the case of the Balance Sheet, of the state of affairs ofthe Company as at 31st March 2012;

b) in the case of the Statement of Profit and Loss, of the Profit,of the Company, for the year ended on that date; and

c) in the case of Cash Flow Statement, of the cash flows ofthe Company, for the year ended on that date.

For SARATHY & BALUChartered Accountants

FRN - 03621S

CA. N. R. SRIDHARANPlace : Chennai PartnerDate : 28th May 2012 M.No. 015527

01 FLC AR 2012.p65 8/28/2012, 9:31 AM13

14

(i) (a) The Company has maintained proper records showing fullparticulars including quantitative details and situation of fixedassets.

(b) The fixed assets other than assets on lease have been physicallyverified by the management at reasonable intervals during theyear. We have been informed that no material discrepancywas noticed on such physical verification.

(c) During the year, the Company has not disposed off substantialpart of fixed assets, which would affect its status as goingconcern.

(ii) The Company does not have any inventory, except the stock onhire, the legal ownership of which is to be transferred to the hirerson receipt of the last instalment from them. The above said stockson hire have been physically verified by the management duringthe year. In our opinion, the frequency of verification of the same isreasonable.

(iii) (a) As the Company has not granted any loan, secured orunsecured to companies, firms or other parties listed in theregisters maintained under section 301 of the Act, the questionof reporting on rate of interest, other terms and conditions,regularity in repayment of the principal, interest and details ofoverdue amounts of loans granted does not arise.

(b) The Company has not taken any loan, secured or unsecured,from any Director or their relative, listed in the registermaintained under section 301 of the Act.

(iv) In our opinion and according to information and explanations givento us, there are adequate internal control procedurescommensurate with the size of the company and the nature of itsbusiness with regard to purchase of Fixed assets and sale of goodsand services. In our opinion, there is no continuing failure to correctmajor weaknesses in the internal control system.

(v) According to the information and explanations given to us, we areof the opinion that there are no contracts or arrangements, theparticulars of which need to be entered in the register maintainedunder section 301 of the Act.

(vi) The Company has accepted deposits from public. In our opinionand according to the information and explanations given to us,the Company has complied with the provisions of Sections 58A,58AA or any other relevant provisions of the Act and the directionsissued by the Reserve Bank of India.

(vii) In our opinion, the company has an internal audit system,managed by a firm of Chartered Accountants appointed by theManagement, which is commensurate with its size and nature ofbusiness.

(viii) The Central Government has prescribed maintenance of Costrecords under Section 209 (1) (d) of the Act, in respect of businessrelating to Electricity generated from wind power by the Company.We have broadly reviewed the accounts and records of thecompany in this connection and are of the opinion, that prima-facie, the prescribed accounts and records have been generallymade and maintained. We have not however, made a detailedexaminers of the same.

(ix) (a) According to the records of the company and information andexplanations given to us, the Company has been regular indepositing with appropriate authorities undisputed Statutorydues including Provident Fund, Investor Education andProtection Fund, Income Tax, Sales Tax, Wealth Tax, Service Tax,Custom Duty, Cess and other Statutory dues whereverapplicable. We are informed that the provisions of EmployeesState Insurance Act and Central Excise Act are not applicableto the Company.

(b) According to the records of the Company and information andexplanations given to us, there is disputed Sales Tax demandfrom different States for a sum aggregating to Rs. 1,644.72 Lakhs

against which the appeals are pending. (Before AACs andCommissioners - Rs. 1,272.15 Lakhs: Tribunals - Rs. 287.06 Lakhs:Revisional Board - Rs. 20.79 Lakhs and High Courts - Rs. 64.72Lakhs).

According to the records of the Company and information andexplanations given to us, there are disputed Income Taxdemands for a sum of Rs. 1,841.29 Lakhs, in respect of whichappeals are pending before the Hon'ble High Court of Madras(Rs. 1,301.86 Lakhs), Income tax Appellate Tribunal (Rs. 348.65Lakhs) and before the Chief Commissioner of Income Tax,Chennai (Rs. 190.78 Lakhs). The Company has paid a sumof Rs. 921.94 Lakhs, under protest.

According to the records of the Company and information andexplanations given to us, there is disputed Fringe Benefit Tax fora sum of Rs. 22.58 Lakhs, which has not been deposited, againstwhich a writ petition is pending before the Hon'ble SupremeCourt of India.

(x) The Company does not have any accumulated losses, as at theend of the year. The company has not incurred cash losses duringthe financial year covered by our audit and in the immediatelypreceding financial year.

(xi) In our opinion and according to the information and explanationsgiven to us, the Company has not defaulted in repayment of duesto financial institutions, banks or debenture holders.

(xii) The Company has not granted any loans and advances on thebasis of security by way of pledge of shares, debentures and othersecurities.

(xiii) The Company is not a chit fund or a nidhi / mutual benefit fund /society. Therefore the provisions of Clause 4 (xiii) of the Companies(Auditor's Report) Order, 2003 are not applicable.

(xiv) In our opinion and according to the information and explanationsgiven to us, the Company does not deal / trade in shares, securities,debentures and other investments.

(xv) According to the information given to us the Company has notgiven any guarantee for loans taken by others from bank or financialinstitutions.

(xvi) To the best of our knowledge and belief and according to theinformation and explanations given to us, term loans were appliedfor the purpose for which the loans were obtained.

(xvii) According to the information and explanations given to us and onan overall examination of the Balance Sheet of the Company, wereport that funds raised on short-term basis have not been used forlong-term investment.

(xviii) According to the information and explanations given to us, theCompany has not made any preferential allotment of shares toparties and companies covered in the register maintained undersection 301 of the Act.

(xix) According to information and explanation given to us and therecords examined by us, securities / Charges have been createdin respect of the debentures issued. However there are nooutstanding on the reporting date.

(xx) During the period covered by our audit the company had not raisedany money by public issue.

(xxi) According to the information and explanations given to us, no fraudon or by the Company has been noticed or reported during theyear under report.


FRN - 03621S


Annexure to the Auditors’ Report

01 FLC AR 2012.p65 8/28/2012, 9:31 AM14


15

* After a Bonus Issue of 1 : 3 and a Public Issue of 5,47,464 Equity Shares.§ After a Rights Issue of 24,80,699 Equity Shares.• Dividend of 30% in 1986 was in lieu of a Bonus Issue and represented a one time payment.

Accordingly, dividend of 25% in 1987 represented a natural progression over the dividenddeclared in earlier years.

� Includes write back of Investment Allowance Reserves [utilised] plus Development Rebate.@ On an enhanced capital issue of Rs. 6.29 crores versus Rs. 3.79 crores for the previous year.

** After conversion of warrant and CCP of 60,00,000 Equity Shares.*** After rights issue and private placement of 64,27,598 Equity Shares.ß As recommended by the Board of Directors.**** After private placement of 20,00,000 Equity Shares.& Including an Extra-Ordinary income of Rs. 3.5 crores in respect of disinvestment of

shareholding in FIAM Ltd.� For a period of sixteen months (from 01.12.2000 to 31.03.2002)

§

@

*

•�

***

**

****&

(Rs. in Lacs)

Year Gross Net Cash Total Reserves Dividends IntrinsicRevenue Profit Profit Asset and (%) value of

Footings Surplus each share(Rs.)

1974 8.46 2.35 4.23 64.05 2.35 – 10.94

1975 19.84 6.77 10.30 89.21 4.26 18 11.70

1976 27.11 8.90 14.20 119.10 8.68 18 13.47

1977 36.03 9.37 18.67 164.17 13.49 18 15.40

1978 47.69 16.48 28.01 181.44 24.26 18 17.25

1979 62.72 22.58 40.34 238.18 35.25 19 18.83

1980 95.34 37.43 68.47 305.66 63.64 19 22.70

1981 133.34 48.04 89.78 464.51 101.70 20 30.34

1982 202.76 71.46 130.54 745.91 161.44 20 40.95

1983 279.82 90.04 163.77 1,102.50 211.44 20 31.78

1984 388.42 114.67 234.34 1,797.22 298.40 21 33.47

1985 597.02 139.31 324.06 2,587.71 396.58 21 40.64

1986 920.08 238.01 503.99 4,874.99 732.29 30 29.19

1987 1,352.19 238.24 690.18 6,128.16 822.41 25 31.63

1988 1,800.50 301.10 1,020.93 7,860.94 848.90 26 23.47

1989 2,573.36 353.83 1,449.51 11,040.92 929.85 26 24.76

1990 3,301.57 457.98 1,908.01 13,189.72 903.19 28 26.47

1991 3,698.47 501.77 2,005.35 15,122.71 1,165.13 28 27.56

1992 4,564.10 610.68 2,168.29 20,334.49 1,646.26 30 27.94

1993 5,783.61 763.24 2,799.53 24,734.50 1,964.87 32 33.49

1994 7,617.85 1,028.18 3,951.75 30,988.14 2,462.82 35 39.07

1995 9,826.94 1,398.84 5,094.17 33,728.78 3,407.33 35 33.53

1996 11,207.61 1,400.40 5,963.36 34,996.35 5,045.14 32 34.63

1997 11,772.85 1,404.38 6,378.77 39,431.43 5,250.96 32 33.80

1998 12,989.57 1,475.34 6,951.65 45,957.63 6,148.64 25 37.75

1999 14,131.12 1,858.37 7,675.64 53,816.62 7,419.72 25 44.26

2000 15,590.27 1,656.90 7,592.79 64,655.82 8,493.50 25 50.10

2002� 18,923.86 1,787.90 7,842.68 71,013.55 9,716.65 26.67 55.86

2003 13,618.01 1,910.95 5,462.44 54,636.94 11,174.70 20 62.73

2004 11,848.97 2,157.50 4,843.12 61,780.66 13,028.91 20 67.16

2005 10,952.46 2,410.26 4,112.29 72,562.92 14,863.60 22.50 75.22

2006 11,649.72 2,710.84 4,338.55 79,982.44 16,989.73 22.50 84.55

2007 13,041.59 2,536.06 5,378.69 91,651.12 13,526.31 22.50 69.35

2008 15,868.27 3,095.80 6,726.97 1,08,913.94 16,025.83 22.50 80.32

2009 19,101.66 3,354.91 7,128.73 1,26,192.26 18,877.37 18.00 92.83

2010 19,082.12 3,487.05 7,765.37 1,39,030.77 21,881.98 18.00 106.01

2011 23,335.21 7,075.09 10,547.57 1,57,815.92 28,437.00 20.00 134.77

2012 21,335.05 3,161.83 5,085.80 1,76,957.40 31,122.05 18.00ß 146.55

38 YEARS TRACK RECORD

01 FLC AR 2012.p65 8/28/2012, 9:31 AM15

16

BALANCE SHEET AS AT 31st MARCH 2012(Rs. in Lacs)

L. SIVARAMAKRISHNAN N.KUMAR FAROUK IRANI A. C. MUTHIAHChief Financial Officer Company Secretary Managing Director Chairman

This is the Balance Sheet referred to in our Report of even date


FRN -03621S


As at 31st As at 31st

Note March MarchNo. 2012 2011

I. EQUITY AND LIABILITIES1. Shareholders' Funds

(a) Share Capital 3 2,279.06 2,279.06(b) Reserves & Surplus 4 31,122.05 28,437.00(c) Money received against share warrants – –

33,401.11 30,716.06

2. Share application money pending allotment – –

3. Non-current liabilities(a) Long-term borrowings 5 3,205.92 3,640.41(b) Deferred tax liabilities (Net) 11,044.85 10,439.89(c) Other Long term liabilities – –(d) Long-term provisions 6 455.45 385.32

14,706.22 14,465.62

4. Current liabilities(a) Short-term borrowings 7 1,15,964.47 96,270.98(b) Trade payables – –(c) Other current liabilities 8 12,258.81 19,591.90(d) Short-term provisions 8 626.79 880.79

128,850.07 1,16,743.67

Total 1,76,957.40 1,61,925.35

II. ASSETS1. Non-current assets

(a) Fixed Assets 9(i) Tangible Assets 1,676.65 2,123.94(ii) Intangible Assets 5.64 9.40(iii) Capital Work in Progress 441.68 327.38(iv) Intangible Assets under development – –

2,123.97 2,460.72(b) Non-current Investments 10 351.38 920.63(c) Deferred tax assets (net) – –(d) Long-term loans and advances 11 8,059.41 7,792.15(e) Receivables under Lease & Hire Rentals 12 99,814.54 88,453.68(f) Other non-current assets – –

1,08,225.33 97,166.462. Current Assets

(a) Current Investments 13 569.25 –(b) Inventories – –(c) Trade receivables 13 1,161.29 1,466.21(d) Cash and cash equivalents 13 742.67 1,914.58(e) Receivables under Lease & Hire Rentals 12 61,189.96 54,683.30(f) Short-term loans and advances 11 2,918.32 4,171.38(g) Other current assets 13 26.61 62.70

66,608.10 62,298.17

Total 1,76,957.40 1,61,925.35

SIGNIFICANT ACCOUNTING POLICIES 2

The accompanying Notes form an integral part of the Balance Sheet

For and on behalf of the Board

02 FLC AR 2012.p65 8/28/2012, 9:32 AM16


17

STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED 31st MARCH 2012(Rs. in Lacs)


This is the Profit & Loss Statement referred to in our Report of even date


FRN -03621S



Note Year ended Year endedNo. 31st March 2012 31st March 2011

INCOME(i) Revenue from Operations 14 20,823.07 17,412.75

(ii) Income from Wind Mill Operation 178.77 274.60

(iii) Other Income 15 333.21 305.65

Total Revenue 21,335.05 17,993.00

EXPENSES(i) Employee benefit expenses 17 331.79 308.63

(ii) Finance costs 18 14,985.30 11,033.98

(iii) Depreciation and Amortisation expense 9 201.23 283.51

(iv) Other Expenses 19 932.16 1,445.03

Total 16,450.48 13,071.15

Profit Before Exceptional and Extraordinary items and Tax 4,884.57 4,921.85

Exceptional items – –Add : Profit Before Extraordinary items and Tax 4,884.57 4,921.85

Add : Extraordinary items 16 – 5,342.21

Prior Period Adjustments – –

Profit before Taxes 4,884.57 10,264.06

Less : Tax expense:(i) Current tax 940.00 2,077.00

(ii) Deferred tax 604.96 1,111.97

(iii) Income tax of Earlier years 177.78 (11.45)

1,722.74 3,177.52

Profit for the year 3,161.83 7,086.54

Earnings per Equity Share

– Basic 13.87 31.04

– Diluted 13.87 31.04

SIGNIFICANT ACCOUNTING POLICIES 2

The accompanying Notes form an integral part of the Statement of Profit & Loss

02 FLC AR 2012.p65 8/28/2012, 9:32 AM17

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First Leasing Company of India Limited (FLCI) is a Public Companyincorporated in India, in the year 1973, under the Companies Act,1956 and having its Shares listed in Madras, Mumbai and NationalStock Exchanges. FLCI is classified as Deposit Accepting AssetFinance Company by the Reserve Bank of India. FLCI is primarilyengaged in the business of Leasing / Hire Purchase and alsogranting loans to Corporate and other entities. It also earns incomefrom the activity of Electricity generation from Wind Energy.

NOTE NO.2 : BASIS OF PREPARATION AND SIGNIFICANTACCOUNTING POLICIES

BASIS OF PREPARATIONThe Company maintains its books of account and prepares theFinancial Statements on accrual basis following the historical costconvention in accordance with generally accepted accountingprinciples ("GAAP") and in compliance with provisions of theCompanies Act, 1956 and the Accounting Standards as specifiedin the Companies (Accounting Standard) Rules, 2006 prescribedby the Central Government to the extent applicable to thisCompany.The Company follows Capital adequacy norms besides prudentialnorms for income recognition and provisioning for Non-Performingand Standard Assets as prescribed by Reserve Bank of India forNon-Banking Financial Companies from time to time.

SIGNIFICANT ACCOUNTING POLICIESa. REVENUE RECOGNITION:

(i) Income from Hire Purchase transactions is accounted,based on the Internal Rate of Return.

(ii) In respect of lease transactions, income is recognised onthe basis of constant periodic return accruing, on the netinvestment in lease, as required by the AccountingStandard AS 19.

(iii) Interest income on loans is recognised on accrual basis,as stipulated in the contract.

(iv) The Company follows prudential norms for incomerecognition and provisioning for non-performing assets, asprescribed by Reserve Bank of India for Non-BankingFinance Companies from time to time and accordinglythe income from Non Performing Assets are recognizedas and when received.

(v) Dividend income is accounted when the right to receivethe income is established.

(vi) Income from sale of electricity generated by Wind Millsand Rental Income from immovable properties arerecognised on accrual basis.

b. FIXED ASSETS:Fixed assets are carried at historical cost with accumulateddepreciation stated separately. Cost includes purchase priceand attributable cost of bringing the asset to its workingcondition for the intended purpose. Assets which are of noutility value are eliminated from the books of account ondisposal or when discarded.

c. DEPRECIATION & AMORTISATION:Depreciation on all tangible assets has been provided on thewritten down value method, at the rates prescribed underSchedule XIV to the Companies Act, 1956. Assets costingRs.5,000/- or less, have been fully depreciated in the year ofpurchase.The cost incurred on Lease hold assets are amortised over thelease period.

Intangible assets are depreciated at 40% on the Written downvalue method.Depreciation on additions is calculated on pro-rata for thenumber of days for which the respective asset is put into useduring the year.

d. INVESTMENTS:Both Current & Non Current investments are stated at cost,with provision wherever necessary for diminution, if permanent,in the value of investments. On the disposal of any specifiedinvestment, the difference between the carrying amount andthe net sale proceeds is charged / credited to the Profit andLoss statement. This is in tune with the Reserve Bank of Indiadirections for Non Banking Finance Companies.

e. STOCK ON HIRE:Stock on Hire under Hire Purchase Agreements are stated atAgreement Values less amounts received and net ofunmatured finance charges.

f. NET INVESTMENT IN LEASE:The assets under Leases are shown as receivables at valuesequal to net investment in such Leases.

g. FOREIGN CURRENCY TRANSACTIONS:Foreign currency transactions are recorded at the rate ofexchange prevailing on the date / at the forward contractrate on the date of the transaction. Liabilities which arepayable in foreign currencies are translated at exchange ratesprevailing on the date of the Balance Sheet and the loss orgain arising on such transactions is recorded in the Statementof Profit and Loss. In the case of forward contracts, theexchange difference, arising between the rate on thetransaction date and the forward contract rate is recognisedover the period of the contract. The Company has not usedthe forward contracts for speculation or trading purposes.

h. EMPLOYEE BENEFITS:From April 2011, the Employer’s contribution towards ProvidentFund is paid to the Organisation (EPFO) in accordance withthe provisions of Employees’ Provident Funds & MiscellaneousProvisions Act, 1952 and the Schemes framed thereunder.The leave accrued has to be encashed within the calendaryear and hence there is no accrued leave to be provided for,except in the case of the Managing Director who is entitledto encash the accrued leave only at the end of the tenure.The Company contributes to a Gratuity Fund, which has takena group policy with Life Insurance Corporation of India forfuture payments of gratuity as determined on actuarial basis,using the "Projected Unit Credit Method", subject to ceilingprescribed under the Income tax Act 1961. The Premiumthereon has been determined to cover the liability under thescheme in respect of the employees of the company, as atthe end of their anticipated future service with the Company.Difference, if any, is provided for in the books.

i. TAXES ON INCOME:

Current Tax:Current Tax on income for the current financial period isdetermined on the basis and at the rates prevailing for therelevant assessment year as per the provisions of the IncomeTax Act, 1961.

Deferred tax:Both deferred tax liability and asset are recognized on timingdifferences between the accounting income and the taxableincome for the year and quantified using the tax rates andlaws enacted or substantively enacted as on the BalanceSheet date. In the case of deferred tax asset, the same will berecognized and carried forward to the extent that there is areasonable certainty that sufficient future taxable incomeavailable against which such deferred tax assets can berealised.

NOTE NO.1 : CORPORATE INFORMATION

NOTES TO FINANCIAL STATEMENT FOR THE YEAR ENDED 31st MARCH 2012

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19

Income tax of earlier years:Any liability arising on account of retrospectiveamendments to the statute is recognised as current yeartax expense.

j. PROVISIONS AND CONTINGENT LIABILITIES:a) The Provisions for expenditure and other obligations

are made based on best estimate and provided for.

b) Provision on Non Performing Assets and on StandardAssets are made as per the Directions of Reserve Bankof India for Non Banking Finance Companies (NBFC)issued from time to time.

c) No provision is made for Contingent Liabilities but thesame are disclosed.

d) Provisions and Contingent Liabilities are reviewed ateach Balance Sheet date.

NOTES TO FINANCIAL STATEMENT FOR THE YEAR ENDED 31st MARCH 2012 (Contd.)

NOTE NO.3 : SHARE CAPITAL(Rs. in Lacs)

Particulars As at 31.03.2012 As at 31.03.2011

AUTHORISED2,75,00.000 (2,75,00,000) Equity Shares of Rs.10/- each 2,750.00 2,750.0025,00.000 (25,00,000) Preference Shares of Rs.100/- each 2,500.00 2,500.00

ISSUED, SUBSCRIBED & FULLY PAID UP:2,27,90,606 (2,27,90,606) Equity shares of Rs.10/- each 2,279.06 2,279.06

2,279.06 2,279.06

a. Reconciliation of the Shares outstanding at the beginningand at the end of the reporting period:

PParticulars 31.03.2012 31.03.2011No of Shares (Rs in Lacs) No of Shares (Rs in Lacs)

Equity Shares:At the beginning of the period 2,27,90,606 2,279.06 2,27,90,606 2,279.06Outstanding at the end of the period 2,27,90,606 2,279.06 2,27,90,606 2,279.06

b. Terms / Rights attached to Equity SharesThe Company has only one class of equity shares having a par value of Rs.10/- per share. Each holder of equity shares is entitled toone vote per share. The company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directorsis subject to the approval of the shareholders in the ensuing annual general meeting.During the year ended 31st March 2012, a dividend of Rs. 1.80 per Share, is recommended by Board of Directors (Previous year- Rs. 2.00 per Share).In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the company,after payment of preferential amounts. The distribution will be in proportion to the number of equity shares held by the Shareholders.

ParticularsParticulars 31.03.2012 31.03.2011No of Shares (Rs in Lacs) No of Shares (Rs in Lacs)

c. Shares held by Holding / Ultimate holding companyand/or their Subsidiaries / Associates:The Company is not a subsidiary Company to anyCompany nor does it have any ultimate holdingCompany. There are no subsidiaries or associate to anysuch (holding). Hence the particulars / information in thisregard is Nil Nil Nil N i l

ParticularsParticulars 31.03.2012 31.03.2011No of Shares % No of Shares %

d. Details of Shareholders holding more than 5% shares inthe company:Equity Shares of Rs.10/- each fully paid upSicagen India Ltd 21,53,649 9.45% 21,53,649 9.45%South India House Estates and Properties Limited 21,02,625 9.23% 21,02,625 9.23%

e. Shares reserved for issue under options: NIL

f. Aggregate number of bonus shares issued, shares issuedfor consideration other than cash and shares boughtback during the period of five years immediatelypreceding the reporting date: NIL

g. Securities convertible into equity / preference sharesissued along with the earliest date of conversion: NIL

h. Calls unpaid: NIL

i. Forfeited Shares: NIL

02 FLC AR 2012.p65 8/28/2012, 9:32 AM19

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NOTE NO.4 : RESERVES & SURPLUS

ParParticulars 31.03.2012 31.03.2011

CAPITAL REDEMPTION RESERVE(As per last Balance Sheet) 300.00 300.00SECURITIES PREMIUM ACCOUNT(As per last Balance Sheet) 2,777.79 2,777.79DEBENTURE REDEMPTION RESERVE(As per last Balance Sheet) – 281.40Less: Transfer to General Reserve – 281.40 –STATUTORY RESERVE(As per last Balance sheet) 7,389.95 5,974.95Add: Transfer from Profit and Loss account 633.00

8,022.95 1,415.00

7.389.95GENERAL RESERVE(As per last Balance sheet) 4,970.31 4,157.91Add: Amt. Transfer from Deb.Redemption Res. – 281.40Add: Transfer from Profit and Loss account 238.00 531.00

5,208.31 4,970.31CONTINGENCY RESERVE(As per last Balance Sheet) 200.00 200.00

PROFIT & LOSS A/C(As per last Balance Sheet) 12,798.95 8,189.93Add:Profit for the year transferred from Profit & Loss a/c. 3,161.83 7,086.54

15,960.78 15,276.47Less: Transfer to Statutory Reserve pursuant to Sec. 45 IC of

the Reserve Bank of India Act, 1934 633.00 1,415.0015,327.78 13,861.47

Less: Transfer to General Reserve pursuant to Companies (Transfer of Profits to Reserve) Rules, 1975 238.00 531.00

15,089.78 13,330.47Less: Dividend Proposed On Equity Shares @ Rs. 1.80 (Rs.2.00)

per Share of Rs. 10/- each 410.23 455.81Less: Dividend Distribution Tax 66.55 75.71Surplus 14,613.00 12,798.95

Total 31,122.05 28,437.00

NOTE NO 5 : LONG TERM BORROWINGS Non-Current Maturities Current Maturities

Particulars As at As at As at As at31.03.2012 31.03.2011 31.03.2012 31.03.2011

a) Bonds / Debentures- Debentures – – – 4,500.00

– – – 4,500.00b) Term loans ( Secured )

- From Banks – – – –- From Other parties 476.08 42.00 181.76 1,057.00

476.08 42.00 181.76 1,057.00c) Deposits

- From Public 2,215.64 3,229.52 2,440.49 2,001.33- From Shareholders 1.15 – 0.30 164.82- Inter - Corporates – – 8,000.00 4,173.00

2,216.79 3,229.52 10,440.79 6,339.15d) Loans and advances from related parties (Unsecured) – – – 821.85

– – – 821.85e) Other loans and advances (specify nature)

- From Banks & Financial Institutions 513.05 368.89 – 4,030.58513.05 368.89 – 4,030.58

Total 3,205.92 3,640.41 10,622.55 16,748.58The Above amount includes :-a) Secured Borrowings 989.13 410.89 181.76 5,557.00b) Unsecured Borrowings 2,216.79 3,229.52 10,440.79 11,191.58c) Amount disclosed under Other Current Liabilities – – (10,622.55) (16,748.58)

Net Amount 3,205.92 3,640.41 – –a) Term Loans obtained from other parties (Financial Institutions) are secured by hypothecation of Equipments hired out and assignment

of rentals thereof and repayable in 41 instalments.b) Deposits from public and Share holders carry interest ranging between 8.00% and 9.96%. No deposit is accepted with a maturity period

of less than 12 months period and more than 36 months. Rs. 1,373.81 Lacs out of the Long Term Public Deposit is repayable within oneto two years and the balance of Rs. 842.98 Lacs is repayable after two years from the reporting date.

c) Inter Corporate Deposits are accepted for short term period of not more than 180 days with interest rate ranging from 9.50% to 14.00%d) There are no loans taken from related party during the current year. (Rs. 821.85 Lacs)e) The Company has not defaulted in repayment of any Loan or Deposit and interest thereon.


(Rs in Lacs)

(Rs. in Lacs)

02 FLC AR 2012.p65 8/28/2012, 9:32 AM20


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(Rs. in Lacs)

Particulars As at As at 31.03.2012 31.03.2011

a) Provision for Employee BenefitProvision for Employee Benefit Schemes 27.69 –

b) Other ProvisionsProvision on Standard Asset 427.76 385.32(made pursuant to NBFC Prudential Norms

(Reserve Bank) Directions, 2007)

Total 455.45 385.32NOTE NO.7 : SHORT TERM BORROWINGS

Loans Repayable to

- Banks - Secured 1,07,964.47 81,770.98

- Banks - Unsecured – 2,500.00

- Institutions - Unsecured 8,000.00 12,000.00

Total 1,15,964.47 96,270.98Short Term Borrowings from Banks are secured by the Assets leasedand the Trade Receivables and falling due within 12 months ofthe Reporting Date.

NOTE NO.8 : OTHER CURRENT LIABILITIES

1 a) Current maturities of long-term debt- Debentures – 4,500.00- Term Loan From Financial Institutions 181.76 5,087.58- Deposits from Public 2,440.49 2,001.33- Deposits from Shareholders 0.30 164.82- Deposits from Related parties – 821.85- Deposits from Corporates 8,000.00 4,173.00

10,622.55 16,748.58b) Interest accrued but not due on borrowings 420.95 586.31c) Income received in advance 29.39 25.30d) Unclaimed Dividends* 57.51 55.63e) Unclaimed Matured Deposits* 167.33 378.56f) Unclaimed Interest* 15.79 15.36g) Other payables

Due to Subsidiaries – –Expenses payables 34.99 133.45Statutory liabilities 45.58 75.63

80.57 209.08h) Trade Deposit received 864.72 1,573.08

12,258.81 19,591.902. Short-term provisions

a) Provision for Income Tax 940.00 –Less: Advance Tax 894.56 –

45.44 –b) Others

i) Provision for Non Performing Assets 104.57 349.27ii) Proposed Dividend including Tax on Dividend 476.78 531.52

581.35 880.79

Total 626.79 880.79

*These figures do not include any amounts due & outstanding to be credited to Investor Education and Protection Fund.


NOTE NO.6 : LONG TERM PROVISIONS

02 FLC AR 2012.p65 8/28/2012, 9:32 AM21

22

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02 FLC AR 2012.p65 8/28/2012, 9:32 AM22


23

NOTE NO.10 : NON CURRENT INVESTMENTS - NON TRADE


Particulars ParticuPlars As at 31.03.2012 As at 31.03.2011Nos Nos.

Other investments (At Cost)Investment in propertyInvestment in Equity instruments 4,100 4.94 4,100 4.94Investment in preference shares – –Investment in Government or trust securities – 346.44 915.69Investment in debentures or bonds – –Investment in mutual funds – –Investment in partnership firms – –Other non-current investments – –

Total 351.38 920.63

DETAILS FOR NON CURRENT INVESTMENTSUnquoted Equity Shares in Body Corporate

4,100 Equity Shares of Rs.10/- each fully paid up inCatholic Syrian Bank Ltd 4,100 4.94 4,100 4.94

Quoted Investment in Government or trust securities7.46% of Government of India Bonds - 2017 Series 50,000 58.78 50,000 58.786.05% of Government of India Bonds - 2019 Series 1,00,000 106.24 1,00,000 106.246.01% of Government of India Bonds - 2028 Series 1,00,000 103.23 1,00,000 103.237.40% of Government of India Bonds - 2012 Series – – 5,00,000 569.256.25% of Government of India Bonds - 2018 Series 75,000 78.19 75,000 78.19

Total 346.44 915.69

1) The Current Market value of the quoted investments in Government securities is not available.2) None of the above investment is Trade Investment.3) Company holds 1,77,250 Fully paid up Equity Shares of Rs. 10/- each, in MCC Finance Limited, the book value of which is Nil.

NOTE NO.11 : LOANS AND ADVANCES

Particulars Particulars Non-Current (Long Term) Current (Short Term)As at As at As at As at

31.03.2012 31.03.2011 31.03.2012 31.03.2011Capital advancesSecured, Considered good – – 326.84 534.68

Total – – 326.84 534.68Security DepositSecured, Considered good – – – –Unsecured, Considered good - Utility Deposits 68.57 96.90

Total 68.57 96.90 – –Loans and advancesLoan Disbursed - Secured, Considered good 3,192.74 2,896.90 2,358.81 3,227.78Loan Against Co Dep. - Secured Considered good 0.58 5.00Loan Disbursed - Unsecured, Considered good 3,598.36 3,701.31 102.95 46.31Staff Advance - Unsecured Considered good 6.84 8.69 2.04 11.56Doubtful – – – –

Total 6,797.94 6,606.90 2,464.38 3,290.65Other Loans and Advances(unsecured - considered good)a) Prepaid Expenses – – 7.00 7.62b) Income tax Refund of earlier year – – – 10.65c) Taxes paid under protest 921.94 1,088.35 – –d) Advance Interest 270.96 – 120.10 327.78

Total 1,192.90 1,088.35 127.10 346.05 Grand Total 8,059.41 7,792.15 2,918.32 4,171.38

No interest has been charged on advances wherever the transactions are in the nature of current account.

(Rs. in Lacs)

(Rs. in Lacs)

02 FLC AR 2012.p65 8/28/2012, 9:32 AM23

24

Particulars Non-Current (Long Term) Current (Short Term)As at As at As at As at

31.03.2012 31.03.2011 31.03.2012 31.03.2011Receivables under Lease & Hire Rentals

Secured, Considered good

a) Advance - Hire Purchase (Net of UMFC) 87,374.03 74,730.28 54,780.65 48,414.74

b) Net Lease Investment 12,440.51 13,723.40 6,409.31 6,268.56

Unsecured, Considered good – – – –

Doubtful – – – –

Total 99,814.54 88,453.68 61,189.96 54,683.30

NOTE NO.13 : CURRENT ASSETS

Particulars Current (Short Term) As at 31.03.2012 As at 31.03.2011

Quoted Investment in Government or trust securitiesInvestment in Government or trust securities7.40% of Government of India Bonds - 2012 Series 5,00,000 569.25 –

Total 569.25 –

TRADE RECEIVABLES

Trade ReceivablesUnsecured, Considered good 843.00 1,284.33Unsecured - Doubtful 318.29 181.88

Total 1,161.29 1,466.21Break up of Trade ReceivablesReceivables outstanding for a period exceeding 6 months 612.14 470.28Other Debts 549.15 995.93Doubtful – –

Total 1,161.29 1,466.21

Doubtful assets have been fully provided for.

Particulars As at 31.03.2012 As at 31.03.2011(Rs. in Lacs) (Rs. in Lacs)

CASH AND CASH EQUIVALENTSa) Balances with banks

- Unpaid Dividend 57.51 55.63- Unpaid Interest 15.79 15.30- on current account 6.36 1,140.74

79.66 1,211.67

b) Other Bank balances- Fixed Deposits - Margin Money 87.20 79.50- on term deposit including interest accrued

thereon - more than 12 months maturity 567.82 618.11

Total 734.68 1,909.28c) Cheques, drafts on hand 2.82 –d) Cash on hand 5.17 5.30e) Others – –

Total 742.67 1,914.58

OTHER CURRENT ASSETSInterest Receivable 26.61 62.70

Total 26.61 62.70


NOTE NO.12 : OTHER NON CURRENT ASSETS (Rs. in Lacs)

02 FLC AR 2012.p65 8/28/2012, 9:32 AM24


25


NOTE NO.14 : REVENUE FROM OPERATIONS

Particulars Year ended Year ended31st March 2012 31st March 2011

- Hire Purchase Finance Charges 16,481.82 12,229.32

- Lease Rentals [TDS Rs. 233.56 Lacs (Rs. 262.28 Lacs)] 3,276.83 4,269.41

- Interest on Loans [TDS Rs. 80.47 Lacs (Rs. 38.70 Lacs)] 975.15 820.67

- Recovery from written off Accounts 0.17 14.97

- Others 89.10 78.38

Total 20,823.07 17,412.75

NOTE NO. 15 : OTHER INCOME

a) Interest Income on- Bank Deposits [TDS Rs. 5.49 Lakhs (Rs. 9.07 Lacs)] 56.95 73.62

- Long term investments 57.62 57.48

- Interest on others 3.47 2.13118.04 133.23

b) Dividend Income on- Long term investments 0.04 14.75

0.04 14.75c) Other Non-operating Income

- Rental Income from Properties[TDS Rs. 21.80 Lakhs (Rs. 4.59 Lacs)] 197.60 154.66

- Profit on Sale of Asset 9.49 –

- Other Income 8.04 3.01215.13 157.67

Total 333.21 305.65

NOTE NO. 16: EXTRAORDINARY ITEMS

Profit On Sale of Long Term Investments – 5,342.21

Total – 5,342.21

NOTE NO. 17 : EMPLOYEE BENEFIT EXPENSES

Salaries, wages & bonus* 233.07 252.71

Contribution to Provident and Gratuity Funds 49.57 15.71

Staff welfare expenses 49.15 40.21

Total 331.79 308.63

*Includes Rs. 104.59 Lacs (Rs. 177.95 Lacs) paid to Managing Director.

(Rs. in Lacs)

02 FLC AR 2012.p65 8/28/2012, 9:32 AM25

26

NOTE NO. 18 : FINANCE COST

(Rs in Lacs)

Particulars Year ended Year ended31st March 2012 31st March 2011

Interest expenses onSecured Borrowings

a) Debentures* 171.39 736.84

b) Institutional Term Loans 72.04 247.91

c) Bank Loans 11,521.56 7,576.72

d) Bank Charges 422.34 333.27

d) Foreign Exchange Rate Difference 16.90 176.5712,204.23 9,071.31

Unsecured Borrowingsa) Public Deposits** 545.02 572.01b) Others 2,236.05 1,390.66

2,781.07 1,962.67

Total 14,985.30 11,033.98

* Includes Rs. Nil Lacs (Rs.2.28 Lacs) paid to a Director** Includes Rs. 9.62 Lacs (Rs.69.09 Lacs) paid to a Director

NOTE NO.19: OTHER EXPENSES

Electricity Charges 7.19 7.97

Rent 49.24 49.68

Rates and Taxes 120.38 176.58

Insurance 11.87 8.71

Printing and Stationery 8.71 8.93

Repairs and Office Maintenance 54.25 47.07

Travelling and Conveyance 46.17 38.15

Postage, Telegrams and Telephones 31.21 30.99

Directors’ Sitting Fees 1.70 1.50

Service Charges 207.53 295.16

Brokerage on Deposits 11.22 13.99

Audit Fees

For Audit 9.55 8.65

For Tax Audit & related matters to Tax Auditors 2.71 2.21

For Certification of Statements and others 5.97 1.45

For Quarterly reviews 6.38 5.63

Reimbursement of Expenses 1.65 1.35

26.26 19.29

Donations 20.57 20.52

Legal and Consultancy Fees 78.94 106.81

Loss on Sale of Assets 60.48 71.54

Miscellaneous Expenses 79.23 97.32

Provision on Standard Assets 42.44 385.32

Bad Debts Written Off 319.47 349.88

Less: Provision for Non-performing assets Reversed (244.70) (284.38)

74.77 65.50

Total 932.16 1,445.03


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27


Disclosures pursuant to applicable Accounting Standards and the Schedule VI to the Companies Act,1956.

I AS - 15 - Employee Benefits:Gratuity (Defined benefit Plan with LIC)

1 Change in present value of obligation 31.03.2012 31.03.2011Present value of obligation as at beginning of the year 35.47 33.52Interest cost 2.84 2.68Current Service Cost 1.35 0.75Benefits Paid (2.75) (2.48)Actuarial loss on obligation 41.84 1.00

Present value of obligation as at end of the year 78.75 35.472 Change in the fair value of the Plan Assets

Fair value of plan assets at beginning of the year 35.67 35.09Expected return on plan assets 55.46 3.06Contributions – –Benefits Paid (2.75) (2.48)Actuarial gain / (loss) on plan assets – –

Total 88.38 35.673 Actual return on Plan Assets:

Expected return on plan assets 55.46 3.06Actuarial gain / (loss) on plan assets – 0.00

Return on Plan Assets 55.46 3.064 Amount Recognised in the Balance Sheet

Liability at the end of the year 78.75 35.47Fair value of Plan Assets at the end of the year (88.38) (35.67)

(Asset) / Liability recognised in the Balance Sheet (9.63) (0.20)

5 Actuarial Gain / Loss RecognisedActuarial loss on obligation 41.84 1.00Actuarial gain / (loss) on plan assets – –Actuarial Gain Recognised in the year 41.84 1.00

6 (Income) / Expenses recognised in the Profit & Loss AccountCurrent Service Cost 1.35 0.75Interest cost 2.84 2.68Expected return on plan assets (55.46) (3.06)Actuarial Gain Recognised in the year 41.84 1.00

Expenses to be recognised in the Profit & Loss (9.43) 1.37

7 Reconciliation of the Liability recognised in the Balance SheetOpening net Asset 1.86 (0.49)Contribution – –Expenses (9.43) 1.37

Closing Net (Asset) / Liability (11.29) 1.86

8 Principal AssumptionsDiscount Rate 8% 8%Salary Escalation 5.00% 5.00%Attrition rate 1-3% 1-3%

Expected return on Plan Assets 8% 8%

II AS - 17 - SEGMENT REPORTING:

The Company is primarily engaged in Hire Purchase/Lease Finance. There is no reportable segment other than primary segment, interms of the above accounting standard.

III AS - 18 - RELATED PARTY DISCLOSURE:(i) List of Related party where control exists:

Key Management Personnel: Mr. Farouk Irani - Managing Director

(ii) Related Party TransactionsRemuneration – Rs. 104.59 Lacs (Rs. 177.95 Lacs)Interest paid on Fixed Deposits – Rs. Nil (Rs. 54.77 Lacs)

(Rs. in Lacs)

02 FLC AR 2012.p65 8/28/2012, 9:32 AM27

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IV AS - 19 - LEASE / HIRE PURCHASE TRANSACTIONS:(1) Leases

(I) Aggregate of Minimum lease payments - Rs. 23,096.87 Lacs (Rs. 26,089.71 Lacs)(ii) Net carrying amount - Rs. 18,849.81 Lacs (Rs. 19,991.96 Lacs)(iii) Maturity pattern of Gross / Net receivable:

Particulars Gross (Rs. In Lacs) Net (Rs. in Lacs)Not later than 1 year 8,450.45 (8,125.20) 6,409.31 (6,268.56)

Later than 1 year and not later than 5 years 14,646.42 (17,964.51) 12,440.50 (13,723.40)

Later than 5 years Nil (Nil) Nil (Nil)

(iv) Unearned Finance income – Rs. 4,247.06 Lacs (Rs. 6,097.75 Lacs)

(v) All initial direct costs are recognised as expenses in the Profit and Loss statement at the inception of the lease.

(vi) Accumulated provision for uncollectible minimum lease payments receivable Rs. 32.50 Lacs (Rs. 181.88 Lacs)

(2) Stock on Hire:

(i) Aggregate of Minimum Hire Rentals – Rs 1,64,924.59 Lacs (Rs. 1,37,192.38 Lacs)

(ii) Net carrying amount – Rs 1,42,154.68 Lacs (Rs. 1,23,145.02 Lacs)

(iii) Maturity pattern of Gross / Net receivable

Particulars Gross (Rs. In Lacs) Net (Rs. in Lacs)Not later than 1 year 66,070.27 (54,856.57 ) 54,780.65 ( 48,414.74)

Later than 1 year and not later than 5 years 98,854.32 (82,335.81 ) 87,374.03 (74,730.28)

Later than 5 years Nil Nil

(iv) Unearned Finance income – Rs. 22,769.91 Lacs (Rs 14,047.36 Lacs)

(v) Accumulated provision for uncollectible hire payments receivable is Rs. 72.07 Lacs (Rs.167.39 Lacs)

V AS - 20 - EARNINGS PER SHARE:


Net Profit attributable to Equity Shareholders Rs. 3,161.83 Lacs Rs. 7,075.09 Lacs

Number of Shares 2,27,90,606 2,27,90,606

Earnings in rupees per Share of Rs. 10/- each 13.87 31.04

VI AS - 22 - ACCOUNTING FOR TAXES ON INCOME:Deferred Tax:

Rs. 604.96 Lacs (Rs. 1,111.97 Lacs) is recognised towards the current year provision, arising out of timing differences, as per the AccountingStandard – 22.

The major components of deferred tax assets and liabilities arising on account of timing differences are:

Component Liability (Rs. In Lacs) Asset (Rs. In Lacs)

Depreciation 1,710.96 (1,903.34) Nil (Nil)

Income Recognition 278.92 (514.62) 1,384.92 (1,305.99)

Total 1,989.88 (2,417.96) 1,384.92 (1,305.99)Net Deferred Tax Liability 604.96 (1,111.97)

VII AS - 28 - IMPAIRMENT OF ASSETS:Assets have been reviewed at balance sheet date for impairment, as per the above Accounting Standard

VIII AS - 29 - CONTINGENT LIABILITIES & ASSETS (i) Pending contracts to be executed


Estimated amount of contracts remaining to be executed onCapital Account/Lease & H.P. Disbursements not provided for 821.28 620.72

02 FLC AR 2012.p65 8/28/2012, 9:32 AM28


29

(ii) Claims against the Company not acknowledged as debts:Tax Demands against the Company not acknowledged as Debts(a) Income Tax demand of Rs. 1,841.29 Lakhs (Rs. 1,879.12 Lacs) against the Company in respect of which appeals have been

preferred and are pending with Appellate Authorities. However the Company has paid under protest Rs. 858.44 Lacsbesides a refund of Rs. 63.50 Lacs due from and adjusted by the department (Rs. 955.91 Lacs) and balance demand hasbeen stayed by the Appellate authorities. Based on expert legal opinion, the Company is of the view that it has fair chancesof success in the appeal and entitled for refund of the amount paid.

(b) Interest Tax demand of Rs. 48.93 Lakhs (Rs. 48.93 Lacs) has been contested in appeal proceedings. The Company has paidRs. 39.13 Lacs (Rs. 39.13 Lacs). The Company is of the view that it has a fair chance of success in the appeal and hence noprovision has been made for the balance amount of Rs. 9.80 Lacs in the books of account.

(c) Liability towards Fringe Benefit Tax of Rs. 22.58 Lacs (Rs. 22.58 Lacs) has not been provided for in the accounts as theCompany has challenged the validity of such a levy before the Hon'ble Supreme Court of India. There is no liability to beprovided in this regard with effect from 1st April, 2009 in view of the repeal of the levy.

(d) Sales Tax demands of various states aggregating to Rs. 1,644.72 Lacs (Rs. 1,224.41 Lacs) have been contested beforedifferent Appellate authorities including the Hon'ble Supreme Court. These demands have been stayed by respectiveAppellate Authorities. The company is confident of successful outcome in the appeals and in the event of any liabilityarising the same would devolve upon the ultimate hirers /lessees and hence no provision has been made in the booksof account. The Company has furnished Bank Guarantees amounting to Rs. 49.17 Lacs (Rs. 49.17 Lacs) and its ownguarantee of Rs. 993.93 Lacs (Rs. 51.53 Lacs)

IX NON CURRENT LIABILITIESLong term borrowings

Long Term borrowings include Loans availed from Banks, Financial Institutions and as Public Deposits which are due beyond 12months from the reporting date.

X CURRENT LIABILITIESa. Short Term Borrowings

Short Term Borrowings include loans, Commercial Papers, Public Deposits and Cash Credit facilities availed from various Banksthat are due and payable in the next 12 months from the reporting date.The maximum amount outstanding towards borrowing under Commercial Paper at any point of time, during the year isRs. 20,000 Lacs (Rs. 20,000 Lacs) and the outstanding as at 31st March 2012 is Rs. 8,000 Lacs (Rs. 14, 500 Lacs)As per the directions of the Reserve Bank of India, the Company has created a floating charge in favour of IDBI TrusteeshipServices Ltd., the Trustee, on the Statutory Liquid Assets maintained by the Company.

b. Other Current LiabilitiesThere is no amount due and payable to Micro and Small Enterprises , in terms of sec.22 of the Micro, Small, Medium EnterprisesDevelopment Act, 2006. The information has been determined on the basis of the information available with the Company.The figures stated under the unpaid Dividends, Unpaid matured Deposits and unpaid interest do not include any amount dueto be credited to Investors Education & Protection Fund.

XI NON CURRENT ASSETSa. Intangible Asset:

Computer Software is grouped under Intangible Asset and is being depreciated @40% under written down value method.b. Long Term Loans & Advances:

In the opinion of the Board of Directors, the Long Term Loans and Advances will have value, on realisation in the ordinarycourse of business, at least equal to the amounts at which they are stated in the accounts.

XII CURRENT ASSETSConfirmation of balances from parties listed under Trade Receivable, is being obtained.

XIII Value of Imports by Company during the year calculated on CIF basis

Particulars 31.03.2012 31.03.2011(Ind. Rs. In Lacs) (Ind. Rs. In Lacs)

Capital Goods - (Leased Assets) 1,057.09 1939.46

XIV Expenditure in Foreign Currency during the year

Expenditure in foreign currency on account of Travel Subscription to Books & Journals 14.45 5.48

Amount remitted in Foreign Currency towards Dividend payment 8.48 –

Other outflow in Foreign Currency towards loan repayment and Capital Goods purchase. 1,080.02 15,413.34

XV GeneralFigures have been re-grouped, re-arranged and re-classified wherever necessary to conform to the revised Schedule VI Formatunder the Companies Act, 1956. The figures in brackets relate to the year ended 31st March 2011.


02 FLC AR 2012.p65 8/28/2012, 9:32 AM29

30

(Rs. in lacs)2012 2011

A. Cash Flow from Operating ActivitiesProfit before Taxation as per Profit and Loss Account 4,884.57 10,264.06

Adjustments for:Depreciation 201.23 283.51Foreign Exchange Loss 16.90 176.57Interest Expenditure 14,968.40 10,857.41Bad Debts written off 319.47 349.88Loss on Sale of Assets 60.48 71.54Rent Received (197.60) (154.66)Provision for Standard Assets 42.44 385.32Provision for Non Performing Assets (244.70) (284.39)Dividend Income (0.04) (14.75)Interest Income (118.04) (133.23)Income Tax Provision for earlier years (177.78) 11.45Profit on Sale of Investments – (5,342.21)Profit on Sale of Assets (9.49) –

14,861.27 6,206.44Operating Profit before Working Capital Changes 19,745.84 16,470.50Changes in Working Capital

Net Stock on Hire (19,009.66) (13,724.37)Lease Investment Account 1,142.14 (839.17)Receivables 304.92 150.28Debts Written off (319.47) (349.88)Loans and Advances 577.54 (3,251.85)Other Advances and Deposits 1,383.59 (448.31)Current Liabilities (2,320.63) (972.40)

(18,241.57) (19,435.70)Cash generated from Operations 1,504.27 (2,965.20)Increase in Advance for assets purchase 207.84 491.05Interest Paid (15,133.33) (10,633.25)Income Tax Paid (Net) (940.00) (2,077.00)

Net Cash Flow from Operating Activities (A) (14,361.22) (15,184.40)

B. Cash Flow from Investing ActivitiesPurchase of Fixed Assets (Own) (11.58) (49.99)Capital Work in Progress (114.30) (327.38)Sale of Assets (Own and Lease) 210.42 112.45Sale/ (purchase) of Investments – 5,363.41Bank Fixed Deposits 41.83 141.93Interest Received 154.13 167.66Rent Received 197.60 154.66Dividend Received 0.04 14.75Net Cash Flow from Investing Activities (B) 478.14 5,577.49

C. Cash Flow from Financing ActivitiesDividends Paid (Including Unclaimed Dividends) (529.64) (477.84)Short Term Loan from Banks (net) 26,320.75 5,357.56Proceeds from Borrowings (11,644.74) 5,030.58Repayments of Deposits (1,392.61) 553.44Net Cash used in Financing Activities (C) 12,753.76 10,463.74Net Increase (Decrease) in Cash and Cash Equivalents (1,129.32) 856.83

Cash and Cash Equivalents at the beginning of the year 1,216.97 360.14Cash and Cash Equivalents at the end of the year 87.65 1,216.97

Components of Cash and Cash Equivalent balances

Cash and Cheques in Hand 7.99 5.30Current Accounts with Banks 79.66 1,211.67

CASH FLOW STATEMENT FOR THE YEAR ENDED 31st MARCH 2012



AUDITORS CERTIFICATEWe have examined the attached Cash Flow Statement of First Leasing Company of India Limited for the year ended 31st March 2012. The Statement has beenprepared by the Company in accordance with the Accounting Standard (AS) 3 on Cash Flow Statement and in compliance with the requirements of listingagreements entered into with Stock Exchanges and is based on and derived from the audited accounts of the Company for the year ended 31st March 2012.

Previous year figures have been regrouped/reclassified wherever necessary to conform to classification of the current period.For SARATHY & BALU

Chartered AccountantsFRN -03621S


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31

SCHEDULE TO THE BALANCE SHEET FOR THE YEAR ENDED 31st MARCH 2012(As required in terms of Paragraph 13 of Non-Banking Financial (Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank)Directions, 2007)

PARTICULARS PRINCIPAL INTEREST ACCRUED AMOUNT AMOUNTBUT NOT DUE OUTSTANDING OVERDUE

LIABILITIES SIDE

1) Loans and advances availed by the NBFCsinclusive of interest accrued thereon but not paid:(a) Debentures : Secured

: Unsecured –(Other than falling within the meaning of public deposits)

(b) Deferred credits – –(c) Term Loans 657.84 657.84(d) Inter-corporate loans and borrowing 8,000.00 22.99 8,022.99 –(e) Commercial Paper 8,000.00 – 8,000.00 –(f) Public Deposits 4,824.91 285.75 5,110.66 –(g) Other Loans - Working Capital Loan from Banks 1,08,477.52 112.21 1,08,589.73 –

Total 1,29,960.27 420.95 1,30,381.22 –

2) Break-up (1) (f) above (Outstanding public deposits inclusiveof interest accrued thereon but not due:(a) In the form of unsecured Debentures(b) In the form of partly secured debentures i.e.

Debentures where there is a shortfall in the value of security – – –

(c) Other public deposits 4,824.91 285.75 5,110.66Interest accrued but not paid – Nil

ASSETS SIDE

3) Break-up of Loans and Advances including bills receivables(other than those included in (4) below):(a) Secured 5,552.13(b) Unsecured 3,710.19

4) Break-up of Leased Assets and stock on hire and other assetscounting towards AFC activities(a) Lease assets including lease rentals under sundry debtors:

(i) Financial Lease 20,337.95(ii) Operating Lease –

(b) Stock on hire including hire charges under sundry debtors:(i) Assets on hire 1,42,154.68(ii) Repossessed Assets –

(c) Other loans counting towards AFC activities(i) Loans where assets have been repossessed –(ii) Loans other than (a) above –

5) Break-up of InvestmentsCurrent Investments:1. Quoted:

(i) Shares : (a) Equity –

(b) Preference –

(ii) Debentures and Bonds –

(iii) Units of mutual funds –

(iv) Government Securities –

(v) Others (please specify) –

2. Unquoted:(i) Shares : (a) Equity

(b) Preference –

(ii) Debentures and Bonds

(iii) Units of mutual funds

(iv) Government Securities

(v) Others (please specify) –

(Rs. in Lacs)

03 FLC AR new keying.p65 8/28/2012, 9:33 AM31

32

Long Term Investments:

1. Quoted:(i) Shares : (a) Equity –

(b) Preference –(ii) Debentures and Bonds –(iii) Units of mutual funds –(iv) Government Securities 915.69(v) Others (please specify) –

2. Unquoted:(i) Shares : (a) Equity 4.94

(b) Preference –(ii) Debentures and Bonds –(iii) Units of mutual funds –(iv) Government Securities –(v) Others (please specify) –

Total 920.63

Amount net of ProvisionsCategory Secured Unsecured Total

6) Borrower group-wise classification of assets, financedas in (3) and (4) above:

1. Related Parties(a) Subsidiaries(b) Companies in the same group(c) Other related parties

2. Other than related parties 167,940.19 3,710.19 1,71,650.38Total 1,67,940.19 3,710.19 1,71,650.38

7) Investor groupwise classification of all investment(current and long term) in shares and securities(both quoted and unquoted)Category Market Value / Break-up Book value

or fair value or NAV (Net of Provisions)1. Related Parties

(a) Subsidiaries – –(b) Companies in the same group – –(c) Other related parties – –

2. Other than related parties 920.63 920.63Total 920.63 920.63

8) Other information(i) Gross Non-Performing Assets

(a) Related parties –(b) other than related parties 318.29

(ii) Net Non-Performing Assets(a) Related parties –(b) other than related parties 213.72

(iii) Assets acquired in satisfaction of debt –

SCHEDULE TO THE BALANCE SHEET FOR THE YEAR ENDED 31st MARCH 2012

(Rs. in Lacs)

PARTICULARS PRINCIPAL INTEREST ACCRUED AMOUNT AMOUNTBUT NOT DUE OUTSTANDING OVERDUE



FRN -03621S

CA. N.R. SRIDHRANPlace : Chennai PartnerDate : 28th May 2012 M.No. 015527


03 FLC AR new keying.p65 8/28/2012, 9:33 AM32

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